Looking at the Near-Term Financial Impact of Health Care Reform
Employers are bracing for the Nation Health Reform(time line by Regence)
financial impact of the new health care reform law, according to a survey from
Mercer. A quarter of the nearly 800 employers surveyed said they expect
compliance with the first round of mandates included in the law to add at least
another 3% to their projected 2011 plan costs; 28% expect an additional
increase of 1-2%, and 13% project an additional increase of less than 1%.
Three of the "immediately"
effective health care reform provisions-effective for plan years beginning
after September 23, 2010 (January 1, 2011, for calendar year plans)-are
discussed below. Given that these and other health care reform provisions
include requirements for coverage expansion concerns about cost increases
are well-founded.
Three health care reform provisions
that are likely to have some immediate financial impact on employers are:
- Expansion of coverage to employees' young adult
children. The health care reform law
requires that plans that provide coverage for dependent children now make
that coverage available until a child turns age 26. (Until 2014,
grandfathered plans can limit this coverage expansion to adult children
not eligible for other employer-provided coverage.) In the Mercer survey,
20% of employers said this provision of health care reform was a
significant or very significant concern to them. The impact of this
coverage expansion will vary, of course, depending in large part on an
employer's demographics-and for some employers, adding a group of young,
healthy individuals could possibly help their plan cost. To moderate the
impact of this piece of health care reform, employers should take steps to
ensure that only truly eligible dependents are on the plan, by conducting
dependent audits. As indicated by the Mercer survey, other steps employers
said they are considering to blunt the impact of this mandate include
requiring proof that dependents do not have coverage available through
their own employers (49%); adding contribution tiers based on the number
of dependents covered (20%); and imposing higher premium shares for all
dependents (16%)
- Elimination of lifetime limits on benefits. The law prohibits lifetime dollar limits on
"essential" health benefits-and this list is long, encompassing
most of the types of benefits found in the typical health care plan (e.g.,
ambulatory patient services, emergency services, hospitalization, maternity/newborn
care, mental health and substance abuse benefits, prescription drugs,
etc.). (This provision phases in to apply to annual limits, which are
banned after 2013.) In the Mercer survey, 21% of employers said this
provision was a significant or very significant concern
- Preventive care benefits. Plans must cover certain preventive care services
without any cost-sharing (deductibles or copayments) required for
the employee or dependent receiving the service from thr doctor or hospital.
Many plans-in particular consumer-directed health plans-already
provide full coverage for certain types of preventive care, as a strategy
to enable the detection and treatment of illness or disease in the early
stages, and as a means to alert employees to lifestyle issues that may be
harming their health. Whether this provision "costs" all employers is yet to
be seen; some research shows that preventive services, especially when
part of a comprehensive health promotion and wellness strategy, generate
a return on the investment that an employer makes in the program.
Noncompliance with these or other provisions in the health care reform law also has a cost for employers, in the form of excise taxes and penalties. Therefore, it's essential to review the
pending mandates, not only to ensure compliance, but also to determine how to
fold them into an effective and comprehensive health care cost management
strategy.
Part of the strategy is to custom design some of the coverage by allowing to receive supplemental insurance especially to replace high deductable for families in the area of accidents and
diagnosis of critical illness such as cancer, heart attack, and stroke. With new preventive care benefits the cost will reduce (100% coverage) because of no cost-sharing. The results are more coverage and with the other expenses related to health coverage going higher this will drive the cost and/or deductable up to an amount a family will not be able to afford losses in other areas.
Most Accident policies are low deductable ($100) and critical illness insurance is lump sum full pay when diagnosed. This would then replace most hardship burden on an insured. The
other benefits on these policies are easily written with no increase as you age or turn in claims. Also if workman compensation is part of the required insurance there is a lot less chance that
an employee will try to claim an accident on it outside the course of work.
Please see my web site at www.allidahoinsurance.com and click on Frank McDonald picture to see
accident and other coverage. Also see section on health insurance to see how to estimate the savings.
More Sites by All IDAHO Insurance Agency
children. The health care reform law
requires that plans that provide coverage for dependent children now make
that coverage available until a child turns age 26. (Until 2014,
grandfathered plans can limit this coverage expansion to adult children
not eligible for other employer-provided coverage.) In the Mercer survey,
20% of employers said this provision of health care reform was a
significant or very significant concern to them. The impact of this
coverage expansion will vary, of course, depending in large part on an
employer's demographics-and for some employers, adding a group of young,
healthy individuals could possibly help their plan cost. To moderate the
impact of this piece of health care reform, employers should take steps to
ensure that only truly eligible dependents are on the plan, by conducting
dependent audits. As indicated by the Mercer survey, other steps employers
said they are considering to blunt the impact of this mandate include
requiring proof that dependents do not have coverage available through
their own employers (49%); adding contribution tiers based on the number
of dependents covered (20%); and imposing higher premium shares for all
dependents (16%)
"essential" health benefits-and this list is long, encompassing
most of the types of benefits found in the typical health care plan (e.g.,
ambulatory patient services, emergency services, hospitalization, maternity/newborn
care, mental health and substance abuse benefits, prescription drugs,
etc.). (This provision phases in to apply to annual limits, which are
banned after 2013.) In the Mercer survey, 21% of employers said this
provision was a significant or very significant concern
without any cost-sharing (deductibles or copayments) required for
the employee or dependent receiving the service from thr doctor or hospital.
Many plans-in particular consumer-directed health plans-already
provide full coverage for certain types of preventive care, as a strategy
to enable the detection and treatment of illness or disease in the early
stages, and as a means to alert employees to lifestyle issues that may be
harming their health. Whether this provision "costs" all employers is yet to
be seen; some research shows that preventive services, especially when
part of a comprehensive health promotion and wellness strategy, generate
a return on the investment that an employer makes in the program.
