Thursday, October 24, 2013

What’s Up with the Affordable Care Act?

It’s more like what’s up, down, in, out and sideways. The last year or so has been predictably crazy, with more changes and delays than you can shake a stick at. Not to mention that many of the regulations that will dictate how everything will work are still being written, or being revised before ever being released. For HR and benefits folks, keeping up with this monster is challenging at best.

The recent government shutdown has left its own mark on this landmark law. The congressional debate over the shutdown, according to the HR Policy Association, included three possible amendments that may well be a part of future changes; since none of them made it into the deal to reopen the government at this point. One would delay the $63 so-called "reinsurance" fee that must be paid by health insurance issuers (and that will be added to the premiums employers pay for group health plans). This $63 is imposed on each and every body an employer sponsored plan covers and is intended to help offset the costs of high-risk individuals in the individual market. The second is to change the definition of full-time employee used to determine how many employees a business has, and which of them has to be offered coverage, which in turn will determine if penalties will be imposed on those businesses for not offering the required health insurance coverage. Currently that definition is anyone who averages 30 hours a week or more. Traditionally, and fairly universally, 40 hours a week has been the base definition of full-time. Lastly, a call to eliminate the tax on medical devices. This is a 2.5% tax on all medical devices (think pacemakers, artificial knees, hearing aids, etc.) charged to the manufacturer of the device, which of course, will be eventually passed along to the consumer, via the charge the insurance company will pay for that pacemaker you need.

Additionally, the 30 hours per week question was the subject of a hearing in the House Small Business Committee's Subcommittee on Health and Technology, where support for increasing it was expressed by the ranking Democrat on the committee, Rep. Janice Hahn (D-CA).

Many in the business community – and union leaders – have criticized this definition, saying it will cause businesses to reduce the hours of part-time employees below 30, and prevent them from working additional hours that would result in them averaging 30 hours per week or more, in order to keep them below the current definition of "full-time". As a result, members of the House and Senate have already introduced the Forty Hours is Full Time Act of 2013. This bill would increase to 40 the number of hours an employee would need to work to be considered "full time." While there are many who argue that this is a "myth" of sorts, I happen to believe that any number of jobs that are negatively affected by this law is too many. Our economy can’t really sustain any hit to jobs. Further, why trash-can a long standing concept of what is full-time, forcing business to change many policies and procedures based on it, or to manage to two different definitions resulting in both administrative hardships as well as confusion among employees?

The big news in recent days is the rollout of the health insurance exchanges, or marketplaces. To describe this rollout as rocky would be a bit of an understatement. The federal exchange, Healthcare.gov has been plagued with serious glitches since opening on October 1st.  Several of the state exchanges have had problems as well. It appears that many of the problems have stemmed from the requirement for people to register, and enter all their personal information, before even being able to browse the health plans available, before they’re ready to buy. Notably, Kentucky’s website did not require people to register first before browsing; and their website has had few problems, and has since enrolled tens of thousands of people. Compare that with Maryland, who has managed, as of Monday, October 21, 2013, to enroll fewer than 2,500. President Obama at one time likened the process to that of shopping on Amazon.com. Does Amazon require you to enter your name, address, age, marital status, children’s info, income, payment method, etc. before browsing the site for the items you want to buy? Ummm, nope.

As reported by CNBC, a survey conducted by uSamp found that 50% of those surveyed were not able to log on without encountering technical problems like errors and "try again later" messages, many were kicked out mid-process. 25% of those trying to get on the websites were not able to create an account at all. Only 19% had no problems. Healthcare.gov cost three times as much as originally anticipated, and will most certainly cost even more to fix.

Also, a recent CNN story reported that an insurance industry source stated that insurers are receiving faulty information about new customers from Healthcare.gov, including duplicate forms, and missing and garbled information.

Yesterday, NBC News reported that the deadline for signing up for coverage could be delayed by as much as six weeks. But it wasn’t clear if that would require approval by Congress or could be done by the Department of Health and Human Services administratively. Under the prospective change, individuals will only be expected to have started enrollment by March 31 to avoid incurring the penalty. Meanwhile, and this is interesting, Democratic Sen. Joe Manchin of West Virginia is drafting a bill to delay the mandate for a year.   Sen. Jeanne Shaheen, D-NH, called for an extension of the open enrollment period to allow people more time to purchase coverage. Who didn’t see this coming?

During the hearings today, a lot of grilling took place – including that of executives of CGI Federal, the main contractor hired to build Healthcare.gov. They all spent a lot of time pointing fingers, (CGI saying it was not its decision to launch the website in spite of known problems, but the government’s) and another interesting, but quite predictable fact was revealed: the software was not thoroughly tested before going live. It was tested for barely two weeks before October 1st.

Probably my favorite quote of the whole thing was when Rep. Anna Eshoo of California, a Democrat, responded to statements that the site crashing was due to a high volume of traffic, "Amazon and eBay don't crash the week before Christmas, ProFlowers doesn't crash on Valentine's Day." That was priceless.

There are more hearings to come in the next week or so. Can’t wait for that. 

One of the most significant delays of the provisions of the Affordable Care Act was the delay of the penalties to businesses for not offering health insurance to full-time (30 hours per week) employees. The so-called Employer Mandate. Many people are not aware that the requirement to offer health insurance (deemed of minimum value and affordable) was not delayed itself. Only the penalty was delayed. However, since the penalty was delayed, the reporting required of businesses also had to be delayed. This reporting is designed to tell the government, among other things, which people (employees) would be eligible for a subsidy should they choose to buy insurance through one of the exchanges, and therefore possibly trigger a penalty to the business. What does that mean? It means that people filling out the online applications at the exchanges are on the honor system when asked on the application whether their employer offers them health insurance, and when asked what their household income is, etc. So, there is no way to reliably validate whether any particular person is legitimately eligible for a subsidy under the Affordable Care Act. It has been reported that once the employer mandate is fully in effect, that efforts will be made to verify eligibility for the subsidy, and to seek reimbursement from those people who were not truly eligible. I don’t see that happening, do you?

Finally, it has been frequently reported that Congress exempted itself from the law. That is not true. However, they did afford themselves a benefit that the rest of us don’t get. Under the law, if you are offered health insurance from your employer, but choose to buy insurance through the exchange, you will not receive the employer contribution to the premium you would have received if you took the insurance your employer offered (also, many employees pay their premiums with pre-tax money, but will lose that benefit as well when purchasing on the exchanges). But guess what? Congress, their staff, the President, Vice President and their political appointees, will still receive their employer contributions to their premiums, and most likely the pre-tax treatment of their premiums. Nice.

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