Reality Sets In

When this bold vision of health care reform became partisan reality in 2010, most analysts agreed its success hinged on the flawless execution of each of its components.

At its core stood the assertion that lower premiums for all Americans would be achieved through mandated participation of a young, healthy demographic currently underserved by an unfair free-market system.

The law’s principal tenet, the individual mandate, weathered numerous legal attacks at the state level only to receive a thumbs-up from the Supreme Court in 2012. The road was cleared for the major components of the law to push forward into 2014.

Then the details began to surface. Politics overran policy. Form superseded function. And the bill nobody bothered to read — what became the biggest law of all the land — began to seem, well, unworkable. What was sold as a safety net for the few has become disruption for many.

The “pay-or-play” mandate for large employers had to be delayed this summer because counting employee hours became too onerous. The threat of reducing employees’ hours to minimize penalties in an insecure economy made for bad politics.

However, the centerpiece — the marketplace exchange — bolstered by the individual mandate and subsidies galore, would right the ship for the administration beginning Oct. 1. Millions of Americans, and mostly those young and healthy, would flood the new market and launch the new era of “affordable” health care for all.

The number needed to achieve success was pegged at 7 million by March 2014. As of today, the number enrolled is still in the thousands nationally.

The “$600 million website” is still on life support, and we’ve learned as much as 40 percent of it has yet to be developed. All of the rates developed for the public exchanges were based on actuarial assumptions predicated on the new demographic engaging in the health insurance system. If those numbers don’t materialize and attract the right age group, rates could increase substantially for 2015.

In the meantime, more Americans have received termination letters from their current insurers than have successfully logged in to enroll. Even many Arkansans have lost their private coverage only to find replacement plans to be markedly different and, in many cases, more expensive.

An issue of concern is how these new plans are being selected by consumers on the state and federal exchanges. Early media reports suggest many buyers are focusing on the lower-cost plans, which in many cases have considerably higher deductibles and out-of-pocket expenses than those currently offered in the private market.

Additionally, in markets across the country, insurers are offering programs with limited networks to reduce costs. Buyers not looking at the details carefully could face financial risk in addition to losing access to their physician or hospital of choice.

Arkansas’ small businesses are experiencing the sticker shock associated with the community rated, mandate-loaded Obamacare plans. On average, those non-grandfathered plans are seeing increases in the 35 percent range and higher. Conversely, small groups that managed to make minimal changes to their benefit plans since 2010 are seeing rates rise as little as 5 to 6 percent. Some might have been expecting relief through the SHOP exchange, first announcing only one option for next year, then two weeks ago postponing for 12 months altogether.

This is only the beginning of what is likely to be several waves of disappointing news for many over the next year as the profundity of this law is unveiled. While business owners are just now seeing the rate impact for 2014 renewals, employees’ paychecks won’t be impacted until after the new year.

Large employers across the state, wresting with part-time versus full-time status over the summer, must now return to counting employees and hours heading into 2015. Pay-or-play will be back in the picture before you know it.

An old industry saying goes, “health care is local.” It’s arguably not best prescribed by a one-size-fits-all federal government approach. Moreover, health care is very personal, a small detail the law’s architects may have overlooked. 

Tom Hayes is the employee benefits practice leader at Regions Insurance, which includes 22 offices in eight states in the Southeast and Indiana. He can be reached at [email protected].