Stuffing the Genie Back in the Bottle…

Before I get into the meat of my message today, I want to vent for a moment.  I have a small addiction to cable news, talk radio and the pundits that populate that cultural phenomenon. I am also mildly addicted to social media outlets such as Facebook and Twitter, mainly as a way to keep my finger on the pulse as to the feelings and attitudes of my peers, family and friends.  With that background in mind, I have a serious request…STOP CALLING The Affordable Care Act HEALTH CARE!!!!  This act has absolutely nothing to due with HEALTH CARE, it is all about health insurance, and there is a huge difference.  Health Care is a good or service provided by a doctor, nurse practitioner, X-ray technician and the list goes on.  Saying that the Affordable Care Act provides a person with health care is like saying that my car insurance is providing me with Auto Care, which simply is not the case.  My car insurance exists to aid my financial burden in the event that I injure another person due to an act, intentional or unintentional, as well as assist in the repair to my vehicle should the need arise.  Health insurance acts in the same manner, and people have FORGOTTEN that fact.  The truth of the matter is that ALL AMERICANS have access to HEALTH CARE, but few want to PAY the cost that comes along with that care.  We are not upset with the doctors who charge the prices they charge, we are not concerned at the hospitals who shift costs from patients who can’t afford the service to those who can, we don’t flinch at the cost of a prescription drug that will improve our quality and quantity of life dramatically, but we are all LIVID  at the audacity that insurance companies, who pay roughly 80% of those costs, charge us increasing premiums to achieve those “rights” in the face of an economic reality that we apparently  don’t mind or even know exists. OK, I feel better now.  So please stop calling the Affordable Care Act health care.

I got on a plane last Thursday to head to a board meeting for the KRMCA, one of my large client groups.  I had a good idea of what my message would be regarding health insurance and the general state of affairs with regard to the Affordable Care Act and what the prudent measures would be moving into 2014.  The trip was about an hour and 45 minutes, and when I landed my phone was blowing up with news that President Obama had reversed course on a key component to the implementation, primarily based on the backlash of a promise made to the American people.  If you like your current health plan, and your current doctor, you can keep them, period.

Well that sounds all well and good in a sound byte and headline format, but how exactly does that look to those who are charged with making that happen?  More importantly, who is this going to affect and who are the winners and losers in this new deal?  Candidly, I don’t know how the President has the authority to arbitrarily change a provision of the law that was enacted after it passed Congress, but that is not why I am writing this blog.  But let us be clear, there will be losers as a result of this policy shift.

Let’s start with the monetary outlay that the health insurance companies have absorbed over the last 3 years getting ready for the 2014 deadline for compliant plans.  My guess is that collectively these companies have spent hundreds of millions of dollars changing benefit platforms, addressing the more mundane rating issues with state regulators, realigning markets to meet the standards, assessing the risks associated with being in the exchanges versus not participating.  The sheer regulatory weight of this law is incredible, and yet, most insurers were ready for things to move forward January 1, 2014.  Oh, wait…that may not be a great idea…they say on November 14^th, one and a half months prior to the anticipated start.   Really?  How can this be a good thing?  How much have we paid in excess premiums already for those administrative gymnastics?  You know that it was passed along to the consumers at some level.  Tell them who the loser is Don Pardo……  The CURRENT POLICY HOLDERS!

Next, lets look at all of those employer firms who were given the option of taking an “early renewal” to postpone the negative effects of the ACA.  According to what I am reading, those people will have to renew their policies at some point in 2014, most opting for December, and subsequently be subject to ACA at that time.  Now you may be thinking, that’s fair,

1.        they were offered a chance to delay ACA for up to 11 months

2.       they exercised their right to make that choice

3.        they were never guaranteed more than that

They should be good, right?  Well technically speaking you are correct; however, if the decision to delay the full implementation of ACA had come in July, the majority of those firms would have stayed on their original anniversary dates and not taken a rate increase early to avoid the eventual negative effects of this law.  These people are clearly the losers in this decision. They are paying more in premiums now, rather than later.   If you recall in a previous blog post, my recommendation to all who would listen was to either renew early or get in to a “bona fide” association plan.  It seems that now, only 50% of that statement would be the right thing to do. Tell them who the loser is Don Pardo……  The COMPANIES THAT RENEWED EARLY AT A HIGHER COST!!!!

The last group of people affected by this decision is the employers who for whatever reason, did not opt to renew early.  There are three scenarios’ that would cause an employer to do this.

1.       They were unaware of the option

2.        Too busy to mess with it

3.       They were an unhealthy group and were looking forward to getting into the health care exchange, where they would likely see their premiums reduced due to community rating

This population of employers, estimated to be around 30% of the employers who had an active group insurance program in 2013 will likely come out ahead due to the President’s decision.  The employers who had unhealthy people in their group plans will still be able to access the health care exchanges beginning in 2014, therefore, as a result of community rating, they may actually see a decrease in the premiums they pay, although they will likely experience the other shoe that will drop and that is access to the doctors that they want to use.  I have written about Skinny Networks in the past, and the skinny networks are a staple in the exchanges.  So those employers might be WINNERS from a premium perspective, but LOSERS from a doctor and hospital choice perspective.

The first two categories listed above are the clear cut WINNERS in my opinion.  They either chose not to make a move by omission or due to circumstance. Either way, they will get the longest reprieve from the effect of ACA than any of the other groups of employers that we have talked about.  Let’s suppose that your company had an anniversary date of July 1, 2013.  You renewed your contract and choose not to early renew again in December of 2013.  Therefore, under the old rules, your company would need to be compliant with ACA on July of 2014….follow me?  Now the way that the new rules are being interpreted, your company can renew the plan you currently have in July 2014 for 12 additional months which in effect keeps you out of ACA compliant plans until July of 2015.

This is a long post, but the fact is this is a confusing subject.  If you have questions about ACA or what you might do to deal with the changing landscape, hit  us up  at Logan Lavelle Hunt.