Gwen Moritz

That Time of Year

Gwen Moritz Editor's Note

I have mixed feelings about what I will learn on Wednesday of next week. I’m not talking about the results of the presidential election — I hope we’ll know that on Tuesday night, but I’m prepared to wait much longer. I’m talking about the cost of next year’s health insurance, which will be the topic of our company’s benefits committee meeting on Wednesday morning.

I’ve been a member of that committee for about 20 years, almost as long as I’ve been editor of Arkansas Business, and it is a duty I face with fear and trembling. Making decisions for myself is one thing; making decisions for co-workers is another. I understand how health insurance became an employee benefit in the United States during the wage freeze of World War II, but I shall never understand why the business community has continued to accept such a massive responsibility.

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Earlier this month, the indispensable Kaiser Family Foundation released the results of its annual Employer Health Benefits Survey. The cost of family premiums rose 4% since last year, to an average of $21,342. Of that, on average, workers contribute $5,588, meaning employers, on average, are paying 74% of the cost of family coverage. For individual coverage in an employer-sponsored plan, the average premium this year is $7,470, also a 4% increase from 2019.

KFF received survey responses from nearly 1,800 employers between January and July, so this is very fresh data, but I have no idea what it portends for 2021. It’s safe to say that this year has not been normal when it comes to health care costs, and the future of health insurance as we have known it in the decade since the Affordable Care Act was enacted is up in the air.

Part of the ACA — aka Obamacare — was struck down by the U.S. Supreme Court in 2012, which is why there are still some states where the working poor never got expanded Medicaid. President Trump and the Republicans did some more whacking while they controlled the House, removing a modest tax penalty for not buying insurance.

Without that tax penalty, a number of Republican attorneys general from around the country (including our own Leslie Rutledge) have argued that the entire law is now unconstitutional. Starting Nov. 10, the Supreme Court — by then presumably more conservative than it has been in decades — will consider the question and may agree.

Then what? Despite years of promises, Republicans did not come up with a replacement for the ACA when they controlled Congress and the White House, and they have not even made an effort since a failed attempt in 2017. Without a replacement, even the parts of Obamacare that are wildly popular will no longer be legally binding

Those include:

► Guaranteed coverage for pre-existing conditions. Promises and assurances notwithstanding, there is no other law that guarantees this.

► Family coverage for young adults. Before the ACA, even dependent children were routinely dumped from family coverage at 23. Now you can keep your kids on your plan until age 26, which can be a huge savings at a time when young adults are just getting their financial lives started. Insurance companies may opt to keep this provision, but there is no other law that guarantees it.

► Expanded Medicaid. More than 20 million people nationally benefit from this, including a couple of hundred thousand Arkansans. Our state’s innovative approach to expanding Medicaid was to buy private insurance for eligible residents, which created larger and more stable insurance pools. Without the ACA, there is no federal money appropriated for this coverage, a blow to the beneficiaries nationally and, in Arkansas, to the carriers who write the policies and the self-paying individuals who benefit from the larger pools.

► Premium subsidies. The ACA provides subsidies to offset the cost of health insurance for the self-employed or people who don’t have insurance available through their employers if their household income is no more than 400% of the poverty level. (According to Kaiser, almost all large employers offer coverage, but only 53% of companies with fewer than 50 employees do.)

► Limits on insurance carrier profits. This is an under-appreciated part of the ACA that, at least in theory, forces insurers to “right-size” their premiums and their administrative costs. They must spend 80% of premiums on patient care (85% in group plans), and cover their administrative costs and profit with the remainder. You may even have shared in a refund if your insurer charged too much. If the ACA goes away, that limit on profits also goes away.

Eager to be shed of Obamacare once and for all? Be careful what you wish for.

Gwen Moritz is the editor of Arkansas Business.