Area Employers Slow in Preparing for ObamaCare
YOUNGSTOWN, Ohio -- Despite the best efforts of Robert M. Gearhart and George Morris III to educate their policyholders, small-business owners are reluctant to join the exchanges created under the Affordable Care Act, better known as Obamacare.
Both are certain that come Jan. 1, it will take effect and, as Gearhart, president of DCWellness in Columbiana, says, “Employers must figure out their strategy. … The most troubling thing we see in the [insurance] market is employers, both large and small, who aren’t making changes.”
Morris, president of Morris Financial Group Inc., Salem, understands his clients’ unwillingness to act. “We’re advising clients to sit tight with what you’ve got,” he says, and see what sorts out by the end of 2014.
“The hurricane’s [implementation of exchanges] going to come on shore” – Morris is certain of that – and by the end of next year, he says, employers will “see what the landscape looks like, see what’s left standing.”
Gearhart tells of the executive director of a nonprofit with full-time and part-time employees who sits paralyzed behind her desk, aware of what’s coming but won’t act.
“I see a lot of frustration,” Morris says, “but no one’s frozen yet.”
Employers have decisions to make and deadlines to meet under Affordable Care, Gearhart and Morris say, and some opportunities to make decisions expire Dec. 31 if not before.
Many employers can renew their current policies for up to a year and delay the impact of Affordable Care, Morris notes, if they fear joining an exchange will prove more expensive.
Such an approach, says Gearhart, “is a short-lived strategy that just postpones a decision as long as you can.”
Both insurance advisers note the phenomenon of no one wanting to be first, of waiting to learn how Affordable Care affects other businesses, especially their competitors, before they set their courses of action.
Some employers will find it costs less to join an exchange, especially if they have a youthful workforce, while others will see their insurance expenses rise.
The issues facing employers:
•What happens should they decide to drop their health insurance and chose to pay the fines instead? In some instances, that would cost less.
•Who among their workforces is eligible for health insurance, who must they cover, if they continue to offer such insurance?
•Is their group better served under the current tiered rating methodology or the community rating that takes effect next Jan. 1?
Most know that an exchange, as Morris defines one, “is an Internet portal where they can explore options, confirm their eligibility and purchase insurance.”
Hindering their ability to choose is Ohio not opening its public and individual exchanges until Oct. 1. Employers seeking to be fair to their employees will have only a general idea of what part-time employees will pay if they work fewer 30 hours a week.
Reports and rumors of employers reducing part-time employees’ workloads to fewer than 30 hours are many but no employer, when approached by The Business Journal, would admit the reductions have anything to do with bracing for Affordable Care. As Gearhart observes, “Employers are going to do crazy things to control costs and [other employers] may see increases in liability as a result.”
When Affordable Care takes effect, the Congressional Budget Office projects individuals will see their premiums increase $55 billion between 2014 and 2022, employers $117 billion over that same period for employers, Gearhart says.
For ratings purposes, the benefits of the wellness programs many employers have launched and encouraged may not be reflected in the rates they pay once they join an exchange. Employee efforts to reduce their intake of cholesterol, lose weight, quit smoking and exercise might not be reflected in the rates employers pay, Gearhart and Morris say.
“If you’ve spent a lot on wellness, you’re going to be penalized,” Morris says.
A workforce made up mostly of people 35 and younger “could see their premiums go up 80 to 100%,” he says. “Companies can’t say, ‘You’re younger. You’re in good health. We get a break.’” Exchanges will not take wellness programs into account.
What Morris does know is, “Ohio will be one of the most actively impacted states in the country” as Affordable Care takes effect. And the Internal Revenue Service is planning to hire another 4,000 to 7,000 agents to monitor just to monitor compliance with Affordable Care.
The last health-care reform of such proportions was Medicare, opposed by the American Medical Association as socialized medicine and the Republican Party. Once physicians learned how Medicare could benefit them, they reversed their stand and today physician and health-care systems are among its foremost champions.
Great Society programs, including Medicare, followed the landslide election of Lyndon B. Johnson as president and a greatly weakened opposition in Congress. Concerns about how expensive Medicare would be have come true, Morris says. He speaks as an observer, he emphasizes, “not a politician. The original benefits turned out to be richer than [anticipated].”
So he has no doubt that “The law is more expansive than anything we’ve ever seen” and premiums will rise.
In the meantime, employers want more information before they commit to a private exchange or choose to join a public one and those with just over 50 full-time employees review their choices.
EDITOR'S NOTE: This story was first published in the MidMay print edition of The Business Journal.
Copyright 2013 The Business Journal, Youngstown, Ohio.
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