Now this brings me back to Obamacare, I and many people have heard that Obamacare you can keep your present insurance and it will not affect you one bit. Well those that read my blog on a regular basis know that I work for one of those big companies and it will affect us a lot. We had our vice president of Human resources send a letter to Ms Tavenner one of the people that works with the dept of health and human services, who reports to Secretary Sebelius who reports to President Obama.
"As you know, I and the other large employer representatives in attendance
i did not agree with your initial assessment that the ACA means “business as usual” for large
employers. Since you committed to share our concerns with Secretary Sebelius and the President, I thought
it might be helpful to summarize the major points for you here.
As you heard from many of us, the ACA will result in increasing costs, for both companies and our
employees, and will also reduce the benefits provided. Here are some of the major drivers of these effects:
The Reinsurance Fee
The ACA requires large employers to pay an annual fee of $63 per covered
participant in 2014. For XXXXX roughly 160,000 enrolled active and retired employees and their
family members, this represents more than $10 million added to the cost of providing
next year. As we discussed, this fee, which is meant to help stabilize the state exchanges as they get
started, provides absolutely zero direct benefit to our participants. It is, essentially, a direct subsidy
from us and our employees to those who participate in the exchanges
Covering Children Until Age 26
There is no doubt that this has been a popular provision
nationwide and at XXXXX we have seen more than 8,000 children added to our rolls resulting in a
permanent increase in our overall
costs of about $14 million per year. We are required to charge the
same for these children as we do for any other children covered by our plan. However, our
experience shows that, on average, these children are consuming considerably more health care
other children we cover. In essence, we are experiencing adverse selection in this population and
that is having an impact on the costs that we and our employees pay for coverage.
The Individual Mandate
As you know, in 2014, the individual mandate
under the ACA kicks in and
those not currently covered under any plan must enroll or pay a penalty to the Federal government.
Our actuaries have estimated how many of those who currently opt out of our coverage will now opt
in. Their estimates are that this
requirement will add another $14 Million in costs to our plan each
year, net of the premiums paid by these individuals.
Thirty Hour Rule
As you heard at the meeting, many employers are planning to reduce employees’
hours to less than thirty per week
in order to avoid the requirements to either provide health coverage
or pay fees for those employees. XXXXX is not one of those employers, and we do not plan to force
employees to work fewer hours as a result of the ACA. For others, however, this represents one of
the negative unintended consequences of the ACA and we support efforts to raise the limit to forty
hours per week rather than thirty.
Pay or Play Penalties
The group health coverage XXXXX provides to its full time employees more
than meets the
definition of “affordable coverage” as defined by the ACA. However, the proposed
regulations that implement this provision of the law are very complex and, when finalized, may
unnecessarily impose HR information systems changes that will be costly to build and maintain. In
addition, there are many unsettled principles surrounding this provision of ACA and based on the
fact that it is already June, employers will not have time to react should final regulations be issued
this year. This puts employers at
risk of being assessed these penalties in innocent situations (such as
when employees take voluntary leaves of absences) and imposes additional costs, even in those
situations where the vast majority of employees are offered affordable, comprehensive coverage.
Recent data released is evidence of what you heard in the meeting
reducing or eliminating rich plan designs in order to ensure they do not pay the tax, since doing so
would represent a significant waste of money. At XXXXX, we did that last year as we eliminated one of
the plan designs available to our pilot group specifically because it would have risked being subject
to the Cadillac tax. However, keep in mind that, eventually, it is not just the “rich” plan designs that
will be affected. Essentially, the Cadillac tax level represents a “ceiling” on the value of benefits
provided in health plans. However, that ceiling rises each year only at the rate of the consumer price
index (CPI). On the other hand, medical inflation is rising at a higher rate than CPI. The way the
math works, given enough years, all plans will eventually risk being subject to the Cadillac Tax and
as they do, the natural reaction will be to continually reduce benefits provided in order to avoid the tax.
At XXXXX we are doing a lot of positive things to provide a platform for our employees to live healthier, more
productive lives. We offer free preventive coverage, we offer telemedicine services, a concierge nurse line
and great tools that provide
vital data (such as it exists) on quality and cost among the provider community.
We provide incentives that reward employees for doing the things that help lead to better long
But make no mistake
the costs imposed on XXXXX and our employees are very real and they are escalating.
The costs mentioned above, when combined with normal medical inflation and the end of the ERRP program
mean that the cost of providing health care to our employees will increase by nearly $100,000,000 next year.
XXXXX will have to absorb the vast majority of that increase in costs so that we continue providing a high
value, high quality health plan, but some of it will have to be shared with our employees as well. And of
course, the balance that the company pays simply means less left over for other investments that make our business stronger.
In closing, the ACA is anything but business as usual for large employers like XXXXX. It represents real and
significant changes that provide real challenges for both our
company and our employees. Thank you for the
opportunity to provide this input. If I can be of assistance in any other way, please do not hesitate to contact
My employer.is letting us employees know that major change is coming to our insurance, it will be much more expensive and less coverage and what we will need to expect as Obamacare gets up and running.