Business Forum: Employers must prepare to implement health care changes

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Election Day is fast approaching, and it's still anyone's guess as to whom will occupy the White House or which party will dictate the agenda in Congress.

Governors in more than half the states have threatened not to implement provisions of the Affordable Care Act until after the elections are decided, in spite of the Supreme Court's narrow decision upholding the law.

However, companies waiting for the outcome of an election and subsequent legislative debate on health care reform risk being unprepared and adversely impacted by their lack of compliance with the law.

Employers need to move strategically forward under the assumption the health care exchanges will take effect Jan. 1, 2014. By doing so, they will be compliant with the law, but still remain flexible to adjust to changes or react to further regulatory guidance.

A recent study titled "Modeling the Impact of 'Pay or Play' Strategies on Employer Health Costs," published by Truven Health Analytics, found that employers opting to drop their health care plans in 2014 and pay the $2,000 penalty (excluding the first 30 employees) imposed by the act instead of maintaining coverage for their employees will not benefit economically in either the short or long term.

The report concludes that the penalties for dropping coverage combined with the new obligation for employers to pay employees more in terms of total compensation to make up for the fact they aren't providing health care is enough of a deterrent to discourage most organizations from dropping medical benefits. Moreover, it argues that eliminating health care coverage might significantly impact a company's ability to retain and recruit talent.

A national poll of employers conducted by Buck Consultants this summer indicated businesses are drawing similar conclusions. Almost 70 percent will continue employer-sponsored health care through 2015. Only about 2 percent will drop coverage. In addition, nearly two-thirds are moving forward with plans to implement provisions of the law that are required through the end of this year, regardless of the outcome of the elections. Just 3 percent are taking a wait-and-see approach.

Toward that end, the federal government will assess states' readiness to implement the Affordable Care Act provisions in January 2013, and by October 2013 insurance exchanges are supposed to be finalized.

According to another summer report prepared by PricewaterhouseCoopers' Health Research Institute, many states already have begun paving the way for businesses to integrate the provisions of the ACA.

The report, "Implications of the U.S. Supreme Court Ruling on Health Care," found that 14 states plus the District of Columbia "have made significant progress toward reform," and 19 states (including Pennsylvania) have made "moderate" progress. The remaining 17 states might have to partner with other states to play catch up.

Therefore, if states are just now starting to think about health care reform, it's likely too late to meet the benchmarks outlined in the law without help from their neighbors.

As these recent studies illustrate, most employers are resigned to the reality of a new health care landscape. With momentum building to implement the 2-year-old law, they are smartly preparing for it.

Although there could be delays and further guidance on how the law will be implemented, the runners have left the starting line and are close to the finish.

The Supreme Court decision might have delayed the end of the race, but regardless of how business leaders or politicians feel personally, employers would be wise to plan for how they will comply with the law.


Tom Tomczyk is the health and benefits practice leader at Buck Consultants, Downtown.


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