Undercover investigators score PPACA subsidies
Originally posted July 23, 2014 by Kathryn Mayer on www.benefitspro.com.
Undercover investigators using fake identities were able to get health insurance and tax subsidies through the federal exchange under the Patient Protection and Affordable Care Act, underscoring ongoing problems and security issues plaguing the health care law, officials said Wednesday.
The nonpartisan Government Accountability Office said they created 12 identities with fake citizenship and immigration statuses and phony income documents to test how easy (or difficult) it would be to get coverage and subsidies under the law.
The agency said 11 of the fake applicants were accepted, and the HHS-run exchanges rejected just one applicant because it lacked a Social Security number.
Though HealthCare.gov flagged some attempts as problematic, the fake applicants found more success on phone calls to call centers handling applications.
“For its 11 approved applications, GAO was directed to submit supporting documents, such as proof of income or citizenship; but, GAO found the document submission and review process to be inconsistent among these applications,” the agency said. “As of July 2014, GAO had received notification that portions of the fake documentation sent for two enrollees had been verified.”
Republicans jumped on the latest news, saying it was yet one more flaw in the faulty law.
“Ironically, the GAO has found Obamacare is working really well — for those who don’t exist,” said Senate Finance Committee Ranking Member Orrin Hatch, R-Utah.
The Obama administration said it was taking the report seriously and would work to strengthen the law’s verification process.
The GAO remarked that findings were “preliminary” and they weren’t jumping to any conclusions yet. The agency said it would release a more detailed report in the coming months.
Eight million people signed up for health plans using the exchanges under PPACA.
The GAO report follows PPACA’s latest hurdle: two conflicting court rulings out Tuesday regarding the legality of PPACA subsidies issued to enrollees in the federal exchange.
Appeals court nixes subsidies for HHS exchange users
Originally posted July 22, 2014 by Allison Bell on https://www.lifehealthpro.com
A three-judge panel at the D.C. Circuit Court of Appeals has issued a decision that could block efforts to expand access to private health coverage in states that decline to set up state-based insurance exchanges.
The judges ruled 2-1 in Jacqueline Halbig et al. vs. Sylvia Mathews Burwell et al. (Case Number 14-5018) that the Internal Revenue Service (IRS) has no authority under the Patient Protection and Affordable Care Act (PPACA) to provide premium tax credit subsidies for users of the PPACA public exchanges run by the U.S. Department of Health and Human Services (HHS).
The subsidies have helped cut the amount QHP buyers pay out-of-pocket for premiums to an average of less than $50 per month.
PPACA created a premium tax credit subsidy for people who buy qualified health plan (QHP) coverage through the exchanges by adding Section 36B to the Internal Revenue Code (IRC).
PPACA lets HHS set up public exchanges in states that decline to set up their own exchanges. IRC Section 36B talks about providing credits to users of state-based exchanges and makes no mention of any credits to be provided for people who buy QHP coverage through the HHS-run exchanges, Circuit Judge Thomas Griffith writes in an opinion for the majority.
"The fact is that the legislative record provides little indication one way or the other of congressional intent, but the statutory text does," Griffith writes. "Section 36B plainly makes subsidies available only on exchanges established by states. And in the absence of any contrary indications, that text is conclusive evidence of Congress’s intent."
Griffith notes that Congress explicitly imposed some key PPACA commercial health insurance provisions, such as guaranteed issue and community rating requirements, on federal territories without providing full exchange subsidy funding for the territories.
PPACA implements some health insurance requirements, such as the community rating requirements, by making changes to the federal Public Health Services Act. HHS last week decided that, because the territories are not going to receive full PPACA expansion funding, the Public Health Services Act excludes territories from its definition of "state," and the PPACA insurance requirements seem to be destabilizing the territories' health insurance markets, the territories can be exempt from the PPACA rules that were set by changing the Public Health Services Act.
Benefit package critical for small businesses
Originally posted July 11, 2014 by Alan Goforth on https://www.benefitspro.com.
Small businesses are taking a cautious approach to hiring, compensation and employee benefits, according to the 2014 Aflac WorkForces Report for Small Businesses. The study of businesses with three to 99 employees also found that benefits are a key component to employee hiring, retention and satisfaction.
Although 63 percent of small-business employees are extremely or very satisfied with their job, many believe there is room for improvement when it comes to their benefits packages. Only 12 percent are extremely satisfied with their benefits, while only 14 percent believe their benefits package meets their current family needs extremely well.
These numbers are vital to employers, because 50 percent of small-company employees said they are likely to seek a new job in the next year. Of that number, 57 percent said they probably would accept a job with slightly lower pay but better benefits. On the other side of the coin, 47 percent said improving their benefits packages is one thing their employers could do to keep them in their job.
"Employees at a small business might be satisfied with their pay, enjoy their company environment, their colleagues and the work itself, but that doesn't mean better benefits offerings elsewhere won't entice them to leave," said Teresa White, executive vice president and chief operating officer of Aflac Columbus. "These findings should alert small-business decision-makers that robust benefits, including voluntary insurance, are an important way to keep employees engaged, productive and loyal."
The study found that 85 percent of small-business employees consider voluntary benefits to be part of a comprehensive benefits program. Six in 10 workers at small companies see a growing need for voluntary insurance benefits today, driven by:
- Rising medical costs (71 percent);
- Increasing price of medical coverage (63 percent);
- Increasing deductibles and copays (58 percent); and
- Reduced number of benefits and/or amount of coverage by their employers (29 percent).
Small-business leaders are well aware of employee concerns and the importance of benefits. Although 84 percent said they either maintained or grew sales and revenues in 2013, they are concerned about taking care of employees and continuing their benefits options. This may be one reason why they hired at a slower pace than medium or large companies last year.
Conflicting Views Of Supreme Court’s Contraception Decision Cloud Other Cases
Originally posted July 8, 2014 by Julie Rovner on https://www.kaiserhealthnews.org.
The Supreme Court’s decision last week that some for-profit corporations don’t have to comply with the contraceptive coverage mandate under the Affordable Care Act may have raised more questions than it answered. Expect confusion – and arguments – as lower court judges and the Supreme Court itself apply the decision to other cases.
This became apparent soon after the Hobby Lobby ruling when the court granted a temporary injunction to Wheaton College, a Christian school in Illinois. The college argued in a lawsuit that the special provisions provided by the Obama administration allowing it to escape the mandate are still insufficient.
But the order for the college, citing the Hobby Lobby ruling earlier in the week, created some confusion over whether Wheaton employees would still get access to contraceptives under the law. And the order provoked a blistering dissent from Justice Sonia Sotomayor, joined by the court’s two other female members, Justices Ruth Bader Ginsburg and Elena Kagan. They argued that the majority was already breaking with the precedent it established only days earlier.
Here are some of the questions raised by the Hobby Lobby case and the remaining cases also challenging the contraceptive coverage mandate.
What is the contraceptive mandate?
As part of the Affordable Care Act, most health insurance plans are required to cover, with no cost-sharing beyond premiums, a wide array of preventive health benefits. For women, that includes all contraceptives approved by the Food and Drug Administration, as well as sterilization procedures and patient education and counseling.
The mandate does not include coverage of RU-486 (mifepristone), the drug used for medical abortions after a pregnancy has been established. But it does require coverage of emergency contraceptives and intrauterine devices, which some believe can prevent the implantation of a fertilized egg. (Newer research suggests that is probably not the case, by the way.)
Who has sued to try to block the mandate?
There have been two separate sets of court cases challenging the contraceptive coverage requirements.
The first set comes from for-profit corporations that, under the law and accompanying federal regulations, are required to provide the benefits as part of their insurance plans. According to the National Women’s Law Center, there have been 50 cases filed by for-profit firms, while the Becket Fund for Religious Justice, which is representing many of those suing, counts 49. Most of those companies charged that the requirement to provide some or all of the contraceptives in question violated their rights under a 1993 federal law, the Religious Freedom Restoration Act (RFRA.)
The cases filed by Hobby Lobby, a nationwide arts-and-crafts chain, and Conestoga Wood Specialties, a Pennsylvania cabinet-making firm, were the first of those to reach the Supreme Court for a full hearing.
Religious nonprofit entities, mostly religious colleges and universities and health facilities, filed the second set of cases. The NWLC counts 59 nonprofit cases; the Becket fund, 51.
The Obama administration, under regulations issued by the Department of Health and Human Services in 2013, is not requiring those organizations to directly “contract, arrange, pay for, or refer” employees to contraceptive coverage. But the organizations say the process by which they can opt out of providing the coverage, which involves filling out a form and sending it to their insurance company or third-party administrator, still violates their religious beliefs by making them “complicit” in providing something they consider sinful.
What did the Supreme Court rule in the Hobby Lobby case?
The majority opinion written by Justice Samuel Alito said that “closely held corporations,” including those like Hobby Lobby and Conestoga Wood Specialties, can exercise religious rights under RFRA. Further, because the Obama administration was requiring those firms to directly provide the coverage, rather than offer them the same accommodation it was offering religious nonprofit groups, the requirement was not “the least restrictive means” of ensuring that women can get contraception and thus a violation of the law.
In making the case for Hobby Lobby and Conestoga Wood, Justice Alito went out of his way to praise the accommodation for religious nonprofits, saying it “does not impinge on the plaintiffs’ religious beliefs that providing insurance coverage for the contraceptives at issue here violates their religion and it still serves HHS’ stated interests.”
What impact has the Hobby Lobby decision had on pending nonprofit cases?
A fairly substantial one. Later that same day the Hobby Lobby decision was handed down, a federal appeals court in Atlanta cited it in issuing an injunction against enforcing the mandate against the Eternal Word Television Network.
But the real fireworks erupted on July 3, when the Supreme Court granted its own injunction in the case filed by Wheaton College.
The unsigned order required the college to write to the Secretary of Health and Human Services, stating “that it is a nonprofit organization that holds itself out as religious and has religious objections to providing coverage for contraceptive services.” The order specifically said the college “need not use the form prescribed by the government, EBSA Form 700, and need not send copies to health insurance issuers or third party administrators.”
Justices Sotomayor, Ginsburg, and Kagan were furious.
“Those who are bound by our decisions usually believe they can take us at our word. Not so today,” Sotomayor wrote. “After expressly relying on the availability of the religious nonprofit accommodation to hold that that the contraceptive coverage requirement violates RFRA as applies to closely-held for-profit corporations, the court now, as the dissent in Hobby Lobby feared it might…retreats from that position.”
What happens now?
The court made clear that in granting Wheaton College its injunction (as it did earlier this year in a case filed by the Denver-based Little Sisters of the Poor), it was not prejudging the case. “This order should not be viewed as an expression of the Court’s views on the merits,” it said.
But what is less clear is whether people covered by the health plans of those nonprofit organizations that are still in litigation will have access to no-copay contraceptive coverage.
The Supreme Court majority appears to think they can be covered. “Nothing in this interim order affects the ability of the applicant’s employees and students to obtain, without cost, the full range of FDA approved contraceptives,” the order said. “The government contends the applicant’s health issuer and third-party administrator are required by federal law to provide full contraceptive coverage regardless whether the applicant completes EBSA Form 700.”
The Obama administration, however, seems not so sure that will happen. “An injunction pending appeal would deprive hundreds of employees and students and their dependents of coverage for these important services,” the Justice Department wrote in its memorandum to the court.
One thing that is clear: Many more of these cases are yet to be decided by many more courts.
Hobby Lobby ruling spilling over to corporate world
Originally posted July 10, 2014 by Alan Goforth on https://www.benefitspro.com.
Both proponents and opponents of the recent ruling by the U.S. Supreme Court in the Hobby Lobby contraception case agree on at least one thing: The case may be settled, but how it will play out in the workplace is far from certain.
The court ruled that the 1993 Religious Freedom Restoration Act prevents certain employers from being forced to pay for contraceptives they oppose for religious reasons. However, the definition of which types of corporations are excluded remains murky.
"Nobody really knows where it is going to go," said Richard Primus, professor of constitutional law at the University of Michigan. "I assume that many more businesses will seek exemptions, not just from the [Patient Protection and] Affordable Care Act, but from all sorts of things they want to be exempt from, and it will put courts in a difficult position of having to decide what is a compelling government interest."
About 50 lawsuits filed by corporations nationwide, which were put on hold during the Hobby Lobby appeal, must now be resolved or re-evaluated. "We don't know ... how the courts will apply that standard," Primus said.
The decision also has ramifications beyond the courtroom. Even closely held companies with sincere religious beliefs must carefully consider the potential marketplace ramifications of crafting health-care coverage according to religious beliefs.
"Many owners of companies don't want to distinguish the difference between what's good for them personally and what's good for their business," said John Stanton, professor of food marketing at Saint Joseph University in Philadelphia. "I believe that if a business owner believes something is the right thing to do — more power to them. That's his business. However, he's got to be ready for the negative repercussions."
Eden Foods of Clinton, Mich., a natural-foods manufacturer, has filed a lawsuit and is balancing religious beliefs and business concerns. Since Eden initially filed its lawsuit last year over mandates to cover birth control in PPACA, some customers have taken to social media to express disapproval and outrage, even threatening a social boycott. However, the corporation also has gained new customers who support its stance.
"It's very conceivable they could lose business," said Michael Layne, president of Marx Lane, a public relations firm in Farmington Hills, Mich. "And they could lose employees, too."
Experts agree that the myriad issues raised by the Hobby Lobby decision could take a while to play out. "I think there will be a rush of litigation in the next year or two," Primus said. "I think that the exemptions are likely to get broader before they are limited."
Major work needed before enrollment
Originally posted July 10, 2014 by Kathryn Mayer on www.benefitspro.com.
The fall open enrollment period needs some major work, as new analysis out Thursday finds low satisfaction and little results, with many consumers remaining “uninsured and underserved,” after the first shopping experience in the exchanges under the Patient Protection and Affordable Act.
The inaugural J.D. Power 2014 Health Insurance Marketplace Shopper Study, which looked at enrollment satisfaction among more than 1,600 consumers who shopped for coverage under PPACA November 2013 through April 2014, found that satisfaction during the first signup period averaged 615 on a 1,000-point scale.
The results indicate that health plans need to “retool” their efforts ahead of 2015 open enrollment, which begins Nov. 15.
“No doubt that ensuring a technologically error-free experience, along with streamlining the online enrollment process will be most impactful to future marketplace shoppers,” said Rick Johnson, senior director of the health care practice at J.D. Power. “While the uninsured are now a smaller group, they continue to be underserved, just as they were prior to the exchanges, and continue to need more information delivered in an easy-to-understand and personal way.”
J.D. Power found that many shoppers began the enrollment process but had problems completing their plan purchase at the time of the survey primarily due to three reasons:
- A combination of technical problems experienced during the enrollment process (40 percent);
- The application process taking too long (19 percent); and
- The website not having enough information about the plans to make a selection (18 percent).
Additionally, 49 percent of shoppers who didn’t complete enrollment did not choose a plan during their initial shopping experience because they had not yet decided which plan they wanted.
The technical problems for HealthCare.gov have been well-documented.
The survey found that satisfaction was higher among those enrollees who got in-person help from brokers and navigators.
When shoppers used a navigator — a certified agent or broker used by 17 percent of shoppers — during the shopping process, satisfaction rose to a score of 631 compared to 611 for those who didn’t use a navigator.
Though it was the least common way to sign up for a health plan, in-person enrollment had a higher satisfaction rate at 715 points. Online enrollment had a satisfaction score of just 597 while selecting a plan on the phone had a score of 623.
That’s in line with previous research from the Urban Institute and the Robert Wood Johnson Foundation, which found that brokers are the highest-ranked of all information sources on PPACA and enrollment help by consumers.
But that finding also means carriers and brokers have more work to do, too, in working to engage consumers. J.D. Power said that “health insurance companies and the exchanges should continue to find ways to personalize the insurance shopping experience for consumers.”
“When the dust finally settles later in 2014 and in 2015, for health insurance providers to thrive in this new environment, they will need to retool their marketing, information and enrollment efforts toward a new generation of uninsured to serve their needs,” Johnson said.
Thousands still lack PPACA coverage
Originally posted July 8, 2014 by Kathryn Mayer on www.benefitspro.com.
Just because consumers are paying for health care coverage though the exchanges under the Patient Protection and Affordable Care Act doesn’t mean they’re actually getting coverage.
According to a report from the Wall Street Journal on Tuesday, thousands of enrollees still lack coverage despite picking a plan and paying for coverage due to problems in the law's enrollment systems. The problems are prevalent in California, Nevada and Massachusetts, states running their own exchanges. The enrollment glitches are causing thousands to delay care and pay more out-of-pocket expenses.
The newspaper’s report follows findings from the Health and Human Services inspector general last week that detailed widespread data errors still plaguing the law. That report found the administration was unable to resolve 2.6 million inconsistencies in the federal exchange out of a reported 2.9 million because the CMS system for determining eligibility was “not fully operational.”
And of the roughly 330,000 cases that could be straightened out, the administration only resolved about 10,000, which is less than 1 percent of the total.
The Wall Street Journal also reported that many enrollees who requested life event changes in coverage — such as marriage or a new child — haven’t gone into effect yet, even months are the request. For example, Minnesota has a 6,500 backlog for coverage change requests because of life events, the report found.
The Journal doesn’t pinpoint exact numbers, but it’s likely a fraction of the 8 million people who enrolled in coverage through the exchanges.
According to a report from the Commonwealth Fund, 20 million people have been covered because of the law — an additional 12 million people who gained coverage through other provisions of the law along with the 8 million who enrolled in coverage through the exchanges since the spring.
3 ways the Hobby Lobby decision affects workplaces
Originally posted July 1, 2014 by Eric B. Meyer on www.lifehealthpro.com.
Mid-morning yesterday, the Internet broke shortly after the Supreme Court issued its 5-4 decision in HHS v. Hobby Lobby Stores, Inc..
Jeez, I'm still cleaning out my Twitter, LinkedIn and Facebook feeds.
In case your wifi, 4G, 3G, dial-up, TV, radio, and other electronics picked the wrong day to quit sniffing glue, the long and short of yesterday's Supreme Court decision is this: Smaller, closely-held (think: family-owned) companies don't have to provide access to birth control if doing so would conflict with an employer's religious beliefs.
So, how does yesterday's decision affect your workplace? I promised you three ways, and here they are:
- The court's opinion creates a PPACA exception for closely-held business. If your company isn't closely held, then there's nothing to see here;
- The Hobby Lobby decision does not allow employers (closely-held or otherwise) to discriminate against employees under the guise of a religious practice. In the dissent, Justice Ginsburg pondered, "Suppose an employer's sincerely held religious belief is offended by health coverage of vaccines, or paying the minimum wage or according women equal pay for substantially similar work. Does it rank as a less restrictive alternative to require the government to provide the money or benefit to which the employer has a religion-based objection?" Well, no. The majority recognized that "the Government has a compelling interest in providing an equal opportunity to participate in the work force without regard to [a protected class], and prohibitions on [discrimination] are precisely tailored to achieve that critical goal."
The Court's opinion is a good reminder about religious accommodations in the workplace. Title VII requires covered employers to make reasonable accommodations for a worker's sincerely-held religious beliefs unless doing so would impose an undue hardship on business operations. The "sincerity" of an employee's stated religious belief is usually not in dispute. (More on that here). And, in these situations, an employer should not judge the employee's religious belief to determine whether it is plausible. Rather, the focus should usually be on whether the accommodation would impose an undue hardship — because the burden there is rather low.
High court nullifies contraceptive mandate for family-owned businesses
Originally posted June 30, 2014 by Jerry Geisel on www.businessinsurance.com.
Family-owned for-profit employers cannot be forced by the federal health care reform law to provide coverage for prescription contraceptives, the U.S. Supreme Court ruled 5-4 on Monday.
The decision, written by Justice Samuel Alito for the majority, came in a challenge to the prescription contraceptive mandate filed by three companies owned by Christian families — Oklahoma City-based Hobby Lobby Stores Inc. and Mardel Inc. and East Earl, Pennsylvania-based Conestoga Wood Specialties Corp. — which argued they should be exempt because of their religious objections to a Patient Protection and Affordable Care Act provision that requires employers with 50 or more full-time employees to provide group health plan enrollees with cost-free coverage of contraceptive prescriptions and services as part of the ACA preventive care mandate.
The mandate as it applies to privately held corporations violates the 1993 federal Religious Freedom Restoration Act, which bars the federal government from actions that substantially burden the exercise of religion, the court ruled.
“We hold that the regulations that impose the obligation violate RFRA, which prohibits the federal government from taking any action that substantially burdens the exercise of religion,” the majority ruled. “The plain terms of RFRA make it perfectly clear that Congress did not discriminate this way against men and women who wish to run their businesses as for-profit corporations in the manner required by their religious beliefs.”
“Protecting the free-exercise rights of closely held corporations thus protects the religious liberty of the humans who own and control them,” the court ruled.
The high court noted, however, that that the ruling applies only to family-owned businesses, not to publicly traded corporations, which the justices said would be unlikely to assert religious rights.
“The idea that unrelated shareholders — including institutional investors with their own set of stakeholders — would agree to run a corporations under the same religious beliefs seems improbable,” the high court ruled.
The court also said there could be alternative ways to provide contraceptives to people who work for family-owned organizations with religious objections to contraceptives — ones that would not violate corporate owners' religious rights.
“The most straightforward way” of accomplishing this, the court said, would have the government provide contraceptive coverage to women who work for employers with religious objections to prescription contraceptives.
Another alternative approach, the justices said, could be businesses' third-party administrators obtaining contraceptive coverage without payment from the employer. The government already extends that option to nonprofit organizations with religious objections to prescription contraceptives.
Several organizations, though, are challenging that approach.
While the justices struck down the contraceptive mandate for companies whose family owners have religious objections to contraceptives, they said it does not negate all insurance-related mandates, such as vaccinations or blood transfusions.
Does the employer mandate matter?
Originally posted June 27, 2014 by Kathryn Mayer on www.benefitspro.com.
Over the past few years, the Patient Protection and Affordable Care Act has had no shortage of scrutiny.
But the employer mandate, perhaps more than any provision, has become a lightning rod for criticism of the law. The provision — once thought of as a key, if not essential, part of PPACA — since its inception has been vehemently attacked by employer groups and business owners. Originally scheduled to go into effect in 2014, the mandate has twice been delayed by the administration, which says it needs more time to implement the provision.
Under the latest delay, announced in February of this year, employers with between 50 and 99 employees have until January 2016 to offer health insurance or pay a fine, and employers with more than 100 employees must offer insurance or pay a fine of $2,000 per worker by January 2015. Companies with fewer than 50 employees are exempt.
Attention to the mandate hit a new high at the Benefits Selling Expo back in April, when Robert Gibbs predicted during a keynote address that the mandate would never be put into effect.
“I don’t think the employer mandate will go into effect. It’s a small part of the law. I think it will be one of the first things to go,” he said to a notably surprised audience.
Gibbs, a former longtime advisor to President Barack Obama, noted there aren’t many employers who fall into the mandate window. He said the delays point to the fact that the mandate “will never happen.”
Media outlets quickly ran with the news, prompting the White House to respond.
House Minority Leader Nancy Pelosi, D-Calif., maintained that PPACA’s employer mandate will — and must — remain part of the law.
Appearing on CNN’s “State of the Union,” Pelosi said that the “employer mandate, the individual mandate, are an integral part” of PPACA, “This is an initiative that has strong pillars in it that relate to each other.”
Even if it’s nothing more than political fodder over the often controversial law, the latest debate raises the question: Will PPACA’s employer mandate really go into effect? And perhaps more importantly, does it matter?
Mandate doesn’t matter
Experts at the Urban Institute researched this very idea. Their overall consensus? Eliminating the mandate “certainly wouldn’t spell disaster.”
Overall, the Washington, D.C., based think tank said, eliminating the mandate would have little effect on employer-sponsored coverage, would “remove labor market distortions” in the law, and might even squash some of the political opposition.
First of all, it would “scarcely affect the total number of Americans who have coverage.” Even without the mandate, 250.9 million people will have coverage, compared to 251.1 million — only 200,000 more — if the mandate remains intact, researchers said.
“So many people have coverage through their employer now, and no one is requiring them to do,” says Linda Blumberg, a health economist and senior fellow at The Urban Institute. “But there are still incentives for [employers] to do it. It’s a way for them to retain and attract the kinds of workers they want. What we did [in our report] was analyze the tradeoff — firm by firm, worker by worker — and look at how employers make these decisions. And for most of them, they will continue to do this to keep employees happy.”
Frankly, Blumberg says, the employer mandate isn’t central to PPACA’s overarching goals.
“The employer mandate isn’t what’s driving the increase of health insurancecoverage; the individual mandate is,” she says. “And also the subsidies. You don’t want to think about the employer and the individual mandate in the same breath. They are very different. One is really essential to it achieving its goal, and one really isn’t.”
Another advantage of eliminating the employer mandate is simply to please employers. Groups such as the U.S. Chamber of Commerce and the National Retail Federation have been asking for the mandate to be repealed all along. They’ve argued over detrimental effects: that numerous companies would downsize or cut hours for their employees to dodge the rule. So not only will killing the mandate subdue those concerns, but, Blumberg says, it could get employers to focus on more important issues — and potentially get them on board with supporting the controversial law.
By taking away those requirements for employers, Blumberg says, “you lessen, significantly, the political resistance to the law from employers.”
“If we could get employers more involved with making sure that the workers have coverage, instead of them worrying about how to avoid [the mandate] or being angry about a requirement that might not even affect them, this could be more successful,” she says. “You take away that friction that the employer community has felt, and I think that’s an advantage for broad-based implementation of the law.”
The mandate matters
Still, there are reasons to be cautious about repealing the mandate. One significant one is funding.
By eliminating the employer penalties and the expenses for employee subsidies, the repeal would open a giant hole in PPACA’s financing. The Congressional Budget Office has estimated that gap at $140 billion through 2023, while the Urban Institute places it lower, at about $46 billion.
“What we found was smaller than what the CBO estimated, but still, penalties make the revenue,” Blumberg says. “That helps support the cost of the program. I would expect it would have to be replaced by another revenue source.”
Of course, there is the issue of what’s best for employees and employers. Without the requirement of offering employees coverage, will employers simply dump their employees into the exchanges? That’s the fear — one that’s been supported by various studies and reports.
The CBO has predicted that as many as 1 million more people may be uninsured in the absence of the employer mandate, though others argue the number will be much smaller. And those dropped from employer-sponsored coverage would likely face paying more for coverage on the exchanges, some argue.
Tim Jost, a professor at Washington and Lee Law School who supports the law, outlined some issues in a post in Health Affairs.
“The end of the employer mandate, and the reporting requirements that accompany it, would also make the exchanges’ job of determining eligibility for premium tax credits and for exemptions from the individual mandate more difficult,” Jost said. “Eligibility for tax credits and for the individual mandate exemption turns on employee coverage offers and enrollment. If employer reporting were eliminated together with the mandate, precise verification of whether an employee is eligible for coverage and the extent and cost of that coverage might not be possible.”
Killing the mandate, too, many industry insiders say, wouldn’t quash political wrangling. Killing it may bring up legal questions—the government could face lawsuits over not implementing the law, for example--and it might also be an admission from the administration that Obamacare is failing. Democrats may suffer in the next election cycle. PPACA opponents may call for more repeals in the law. Arguments are endless.
Other alternatives
Of course, because of the revenue hole, there needs to be an alternative if the employer mandate is repealed.
Jost suggested one way: to not just repeal the mandate, but replace it—by requiring employers to spend a certain percentage of their payroll on health benefits. He noted that the House passed a similar version of the employer mandate in 2009.
“The House bill required all employers to spend at least 8 percent of payroll on health benefits,” Jost wrote for Health Affairs. “Small employers were required to pay a smaller percentage of payroll, which rose as total payroll increased. Employers who spent less than the minimum paid the difference between what they actually spent and 8 percent of payroll to the federal treasury as a tax.”
The new version of the mandate, Jost said, would “dramatically” reduce the complexity of the current approach.
“Employers would only need to know two numbers: the amount of their payroll and the amount they spent on health benefits,” Jost said.
Of course, it’s not easy to simply repeal and replace.
Still, even without the employer mandate, industry insiders note, employers would need help from brokers on other areas of PPACA compliance, including market reforms and notice requirements.
And, of course, the political environment might not allow for any changes.
“There are certainly a lot of revenue sources, like a payroll tax assessment,” Blumberg says. “There are lots of options for revenue; the problem is you’re going to have political agreement to do that. But that puts us back in the place of, can we get folks to reach across the aisle and say, ‘this isn’t an essential component of this law; it’s a revenue-raising tool causing enough grief and concern among employers that we’d like to find a different revenue source.’ I think the chances are low because of the political reactions these days.”
Looking forward
Whatever the decision, industry folks want to know it — and soon.
Delaying the mandate — though praised by some — has caused more anxiety in the community, because no one knows when, or if, the requirement will really go into effect. And the mandate, whether in place or not, can have an effect on future premiums under the law.
“There’s a real fear, there’s a lack of understanding and there’s confusion — it’s a complicated law,” Blumberg says. “You take a complicated law and you layer on top of it delays and implementing pieces of it — it creates more confusion and angst.”
Glenn Dunehew, director of health and benefits at the Barrow Group in Atlanta, agrees.
“We need to know, now, that the law is either going to be implemented or postponed,” he says. “The longer that the administration waits on starting it, the more money it costs companies and brokers.”