What is in this article?:
- No employer is required to provide health insurance
- Small employers will be able to offer choice instead of a single plan
- All policies must now cover children younger than 19 with pre-existing conditions
Improvement in plan quality
Overall health plan quality should also improve. Carriers are required to meet minimum standards that erase some perceived abuses of years past. Here are some examples of the new parameters effective this year:
- All policies must now cover children younger than 19 with pre-existing conditions. That mandate extends to all adults in 2014.
- A ban on lifetime dollar limits.
- Elimination of rescission – the practice of canceling coverage after someone gets sick.
- A requirement to extend coverage to age 26 for dependent children.
Finally, the legislation prohibits the practice of raising premiums when workers get sick. Carriers will be allowed to adjust rates only on the factors of family composition, tobacco use, age and employer location. That should eliminate the sudden spike in premiums that so often occur for small employers.
“Many small businesses don’t even know why their insurance gets jacked up,” says Gardiner. “The smaller your company, the worse it is. Now everyone will be in one large pool.”
The end of price discrimination by health status, along with the bill’s requirements that everyone buy insurance, should encourage worker mobility. Thus, smaller employers will find it easier to recruit top-performing workers.
Don’t overlook a hidden expense: the administrative overhead required to understand and comply with the law’s provisions.
“There is a hidden cost in labor and time required to manage all the changes required by the legislation,” says Cynthia Van Bogaert, employee benefits attorney at Boardman, Suhr, Curry & Field, Madison, WI (www.boardmanlawfirm.com). “Employers will have to learn about the legislation and monitor additional guidance from agencies such as the U.S. Department of Health and Human Services.”
Some employers are saying, “Maybe it’s easier to just pay the penalty [required of larger employers who do not provide insurance] and let employees buy whatever they want?” says Joan Smyth, partner at the New York City-based Mercer consulting firm (www.mercer.com). “That’s scary, because we do not know what the state exchanges will look like and how they will be priced.”
Concerns that higher carrier costs will trickle down to the real world of monthly premiums seems to ring alarm bells everywhere. “Congress will come back to the table in future years to address healthcare inflation,” says Gardiner. Reforms to control costs have not gone far enough. Some $2.4 trillion flows into the healthcare industry each year. Every part of the industry has a lobby group that says ‘Don’t tweak my part of the budget too much.’”