What Happens Now that ‘ObamaCare' Has Cleared its Final Hurdle? (Opinion)

by Tom Hayes  on Friday, Dec. 7, 2012 8:36 am  

• It’s the final group — the 30 million to 40 million uninsured — for which this legislation was intended. On inspection of those numbers, it would appear the actual “uninsurable” population is around 10 million. Also counted in this group are people between jobs, those eligible for Medicare and Medicaid who haven’t enrolled, and the young who, feeling invincible, choose not to buy health insurance.

Employers have many important decisions to make by Jan. 1, 2014. Those with 50 or fewer full-time employees will start seeing the effects of community rating in early 2013, and will be introduced to a new term called “rate compression.”

By removing the ability to underwrite risk and providing guarantee-issue policies to all, insurers will no longer be able to apply discounts across a wide rating band for groups with favorable demographics.

Conversely, groups with older, less healthy employees will benefit by these rating tiers moving toward the middle. Early indications are we could see swings in small-group premiums of 25 percent to 50 percent. Plans deemed “grandfathered” will continue to follow the current rating formulas, but will still be subject to many of the new provisions.

Employers  with more than 50 full-time employees face different challenges, and planning should be under way to determine if current programs comply with actuarial values and affordability testing. Medical plans not meeting these requirements face penalties ranging from $2,000 to $3,000 per employee.

Large employers will either continue offering health insurance to their employees and play by the new rules, or throw up their hands and pay the mandatory penalties. The latter sends a work force to fend for itself in one of the catch-all programs.

The law will continue to be modified in coming years, but there are some certainties: Most everyone will pay something for health coverage, and that coverage will, at least in the short term, be more expensive. And the health care system this country has known is changed forever.

Tom Hayes is executive vice president of the Life and Employee Benefits Division of Regions Insurance. He can be reached at 479-684-5259 or tom.hayes@regions.com.



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