Is it a just another bump in the road, a large pot hole, or is it a huge sink hole that keeps getting bigger and bigger and bigger and will eventually consume the Patient Protection and Affordable Care Act aka: PPACA / Affordable Care Act / Health Care Reform / (HCR)? Over the holiday it was announced that the large employer (50+ employees) mandate penalty was going to be postponed until 2015. As a result, one of two “core components” of the law has been suspended for at least 18 months. That component required employers with 50+ full time employees (FTE’s) to provide metallic (deluxe) levels of health care coverage to their employees. If they did not, those employers were to be penalized, and that penalty revenue was expected to help the federal budget by $10 BILLION next year alone. But now, that revenue will not be flowing into the US Treasury. Furthermore, even though hundreds of thousands of employees will not be obtaining coverage from their employer in 2014, the other “core component” of the law (the individual mandate) will STILL require those individual employees to obtain individual health insurance coverage. They will flood the state based exchanges, and, depending on their income, they will be eligible for tax subsidies to buy individual coverage. Therefore, if nothing else changes in the implementation of the law, the federal government will lose billions in penalty revenue AND in fact spend billions more than expected in individual subsidies for the additional people using the state based exchanges, which may in fact result in the Feds. asking for more tax hikes of all kinds to support HCR. That announcement is generating a significant amount of media coverage suggesting that the decision points to broader problems with the law’s implementation. In particular, many news outlets cast the decision as an implicit acknowledgment from the Administration that HCR is likely to depress hiring and reduce workers’ hours as employers look for ways to avoid the penalty for failure to provide health insurance. Jeff Glor, on the CBS Evening News said that even apart from the employer mandate delay, the Administration is having a “problem...getting healthcare reform up and running.” Correspondent Wyatt Andrews went on to report that the impending employer mandate deadline “has led to layoffs and has impacted hiring,” but nevertheless, the decision to delay it is “a setback” for the Administration because it has “insisted...that health reform would be implemented in full and on time.” Andrews also reported that the delay is a “gift to Republican critics who’ve argued the health reform law is too complicated and too much of a burden on businesses.” Andrews added that it is likely that the employer mandate will be “an issue in next year’s congressional elections.” The New York Times reports that Administration officials announced that the British company Serco has been awarded “a contract worth as much as $1.2 billion” to “help them sift applications for health insurance and tax credits under the new health care law.” The Times notes that while the company has “extensive experience as a government contractor,” it has “little experience with the Department of Health and Human Services or the insurance marketplaces, known as exchanges, where individuals and small businesses are supposed to be able to shop for insurance.” More employers will drop their group health insurance and send their workers to the individual market to find coverage. That was the prediction issued by a leading brokerage training firm and operator of one the nation’s growing number of private health care insurance exchanges a day after the Obama administration revealed it had decided to postpone the employer mandate in the HCR. They also noted that before the decision, many small employers not subject to the mandate were considering abandoning coverage so their employees could access the government subsidies available through the coming exchanges. With the threat of stiff penalties removed for at least another year, large employers can now make their decision the same way small employers will – based on what’s best for the employees, it said, “but the No. 1 reason is to attract and retain quality employees. The problem is that next year, group health benefits may no longer be beneficial for a large percentage of employees – in fact, some workers may actually seek out companies that do not offer group health insurance.” That’s because offering coverage that is affordable for the employee blocks all “related individuals” – generally, the spouse and tax-dependent children – from accessing a government subsidy. “It really doesn’t make any sense,” they said. “The IRS has concluded that Congressional intent was to block these individuals from obtaining the tax credits. "(But) instead of basing the affordability determination on the cost of the family premium, they’re basing it only on what the employee would pay, which means that coverage will be considered affordable for most employees and their family members will be locked into the employer’s plan, even if it’s significantly more expensive and the employer isn’t contributing to the dependent premiums. Nearly two-thirds of U.S. households earn less than 400 percent of the federal poverty level, the cutoff point for the subsidies they said. “Employers won’t be able to compete. “The subsidies are too rich; so many employers will conclude that it’s best to let the government take care of the health insurance.
Posted on: Fri, 12 Jul 2013 11:52:16 +0000
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