Highmark Health is cutting reimbursement to doctors by 4 percent effective April 1 for care provided to patients with health insurance bought through the government exchange — the latest effort to trim losses in a market segment that has caused headaches for carriers nationwide.
All Pennsylvania doctors who participate in Highmark’s health insurance plans and treat patients with coverage required by the Affordable Care Act will be affected by the reimbursement cut, said Alexis Miller, senior vice president of individual and small group markets.
The doctors’ pay cut is needed to stem losses in individual health-law coverage as the insurer looks for other ways to stop the bleeding, Ms. Miller said.
According to the Kaiser Family Foundation (KFF), average premiums in the workplace were up 24 percent for individual plans and 27 percent for family plans. The vast majority of privately insured Americans – 9 out of 10 – purchase coverage through their employers.
Cost-sharing grew even faster. KFF reports that the average deductible for all workers was $1,077 in 2015, up from $646 in 2010—a 67 percent increase.
Over the past 5 years, a typical family of four faced 43 percent higher health costs, including both premiums and out-of-pocket expenses. The Milliman Medical Index also shows that employer costs increased by 32 percent, from $10,744 in 2010 to $14,198 in 2015. That’s nearly $3,500 that could have gone into paychecks if health costs had not soared.
The Affordable Care Act changed employers’ role in the U.S. health care system. The ACA fundamentally altered the employer-based system by making the provision of health benefits mandatory rather than voluntary for employers with more than 50 employees and establishing minimum criteria for affordability and coverage. In addition, a “play or pay” model was created, providing employers with an exit: employees would no longer become uninsured if their employers dropped benefits but could instead purchase guaranteed and potentially subsidized insurance through public exchanges.
Two financial milestones are leading employers to evaluate whether they want to play or pay. In 2015, employers with more than 100 employees became subject to a shared-responsibility penalty for coverage that didn’t meet federal standards; further down the road, a 40% excise tax on coverage over a maximum dollar value (the so-called Cadillac tax) is due to go into effect (implementation was originally set for 2018, but Congress recently voted to delay it by 2 years). Although it’s still early in the game, employers are making key decisions that affect patients, health care providers, and insurers.
Many contractors who provide farm labor and must now offer workers health insurance are complaining loudly about the cost in their already low-margin business.
Some are also concerned that the forms they must file with the federal government under the Affordable Care Act will bring immigration problems to the fore. About half of the farm labor workforce in the U.S. is undocumented.
“There’s definitely going to be some repercussions to it,” said Jesse Sandoval, a farm labor contractor based in Stockton, California. “I think there’s going to be some things that cannot be ignored.”
President Barack Obama is having a tough time winning friends for his Cadillac tax.
His plan to dial back the unpopular ObamaCare tax on high-cost health plans, to be detailed in the fiscal 2017 budget he’ll release Feb. 9, has won him no applause from employers, labor unions or health insurers. The tax still must be repealed, they say, not merely modified.
“The ‘Cadillac tax’ cannot be fixed,” James Klein, president of the American Benefits Council, a nonprofit representing employers, said in a statement. “We’re glad the administration recognizes the ‘Cadillac tax’ is seriously flawed. But its impact in high cost areas is just one of its many problems.”
he Cadillac tax was apt to be politically unpopular. It was particularly apt to be unpopular with politically active groups, such as unions. It therefore seemed somewhat unlikely to us that the Cadillac tax would ever be actually allowed to take effect. Don’t be alarmist, we were told; the administration knows that all the parts of this law hang together. It will not start disassembling the complicated structure it spent so much time and political capital putting together.
And to be sure, the administration has not capitulated in the face of considerable political pressure. Well, it has not capitulated much. The White House did agree to push the implementation date back to 2020 from 2018. That ObamaCare’s principle architects want to be safely away from 1600 Pennsylvania Avenue before the Cadillac tax is implemented gives you a pretty good idea of how politically viable it is.
As more requirements of the health care law take effect, income tax filing season becomes more complex for small businesses.
Companies required to offer health insurance have new forms to complete providing details of their coverage. Owners whose payrolls have hovered around the threshold where insurance is mandatory need to be sure their coverage — if they offered it last year — was sufficient to avoid penalties.
Even the most tax-savvy owners may find that do-it-yourself doesn’t work when it comes to fulfilling the law’s requirements. Many don’t know about the intricacies of the new health care regulations associated with the law that affect employers, says Lydia Glatz, an accountant with the firm MBAF in Fort Lauderdale, Florida.
“Most small businesses and mom-and-pop operations,” Glatz says. “They’re more involved in running their day-to-day business.”
President Barack Obama will propose reducing the bite of the unpopular “Cadillac tax” on high-cost health insurance plans in the budget he releases next week, in a bid to preserve a key element of the Affordable Care Act.
Jason Furman, the White House Council of Economic Advisers chairman, wrote in the New England Journal of Medicine that the president’s plan would reflect regional differences in the cost of health care, reducing the tax’s bite where care is particularly expensive.
“This policy prevents the tax from creating unintended burdens for firms located in areas where health care is particularly expensive, while ensuring that the policy remains targeted at overly generous plans over the long term,” Furman wrote in the Journal article.
There is little congressional appetite to revisit ObamaCare’s Cadillac tax in an election year, but that’s not stopping the coalition opposing it from campaigning about it.
Fight the 40, the coalition that includes unions and Fortune 500 companies as members, is still pushing for a full repeal of the 40 percent excise tax on employer-sponsored health benefits above a certain threshold. The tax was originally scheduled to go into effect in 2018 but was pushed back two more years in December.
“We will continue our work to highlight how the tax creates age, gender, and geographic disparities and how it impacts vulnerable demographics,” the group said in a memo shared first with Morning Consult.
Two studies published in the most recent Health Affairs journal raise questions about the contention that the Affordable Care Act will reduce employment, wages, and hours worked by employees.
The study by Gooptu and colleagues examined the effects of the law’s Medicaid expansion on employment and found no statistically significant effect through March 2015. A related study by Moriya and colleagues examined the subsidy structure provided to households getting health insurance through the ACA’s exchanges and similarly found no discernible effect on levels of part-time employment for employees eligible for these subsidies.
These studies provide useful new information, but they do not mean, as some reporting on them seems to suggest, that there is nothing to worry about with respect to the ACA’s effects on labor markets. Given the structure of the ACA, it would be hard to conclude the law would not eventually reduce hours worked or total compensation, although the magnitude of the resulting changes may be hard to detect in the U.S.’s large and complex labor markets.