“Employers are dashing to deal with the U.S. Supreme Court’s landmark health care ruling.
Companies that put off some benefits decisions amid doubt created by the constitutional challenge to the Obama administration’s massive health care overhaul suddenly find themselves confronting key questions about how to reshape their health plans, take advantage of the proposed insurance exchange and avoid the looming tax on Cadillac policies.
They must make decisions about next year’s coverage in a matter of months before turning their attention to 2014, when the mandate to provide coverage starts. Concerns are likely to mount that some firms will forgo coverage, preferring to pay a penalty.
While some business owners say the law gives them hope they can afford health insurance, they still must grapple with climbing costs, which some critics say will not be contained by the law. Adding to the uncertainty, key federal regulations have yet to be issued, while efforts to set up an Illinois exchange have been stymied by politics.
“There will be a mad scramble,” says Laura Minzer, executive director at the Illinois Chamber of Commerce’s Healthcare Council. “Regardless of the Supreme Court decision, or even the election, you really should plan as if this is moving forward and start mapping out your business decisions.”
Despite its apparent flaws, the Patient Protection and Affordable Care Act, which was upheld last week, aims to dramatically expand the number of people who will receive some form of health care coverage, either through Medicaid or private insurance, including more than 1 million people in Illinois, according to some estimates.
While the expansion will help Chicago’s poorest neighborhoods, it also will have an impact in some unexpected places. Nearly 15 percent of suburban residents lacked health insurance in 2010, up from about 12 percent in 2005, according to a study released last month by the Metropolitan Chicago Healthcare Council, a hospital trade group.
COSTS OF REFORM
Statewide, about 15 percent of full-time workers don’t receive health benefits, with the problem worse for the self-employed and employees at small firms, the study found.
Paul Edwards, majority owner of a west suburban debt collection agency, says premiums for his 17 full-time employees shot up 48 percent last year, increasing the company’s cost to about $100,000.
The health care law will make insurance more expensive, but the money will be well-spent, he says. “I will make less money as a small-business owner to do what’s right for my people,” says Mr. Edwards, president of Wood Dale-based Alliance Asset Management Inc., which had revenue of $2.3 million last year.
Some businesses are eligible for tax credits to offset the cost of health insurance. To help pay for the health care overhaul, two new taxes on high earners kick in next year. One measure increases employees’ share of the Medicare payroll tax, while another raises taxes on investments.
Large, self-insured companies already are looking for ways to avoid a tax on the most expensive health plans, such as spending more on wellness plans to reduce costs and preparing to cut retirees’ benefits if needed, says Steve Riedl, a Chicago-based senior consulting actuary at consultancy Towers Watson. The tax goes into effect in 2018. “They’re putting the building blocks in place so they can avoid the tax or at least minimize the effect,” he says.
While 15 states already run insurance exchanges, Illinois’ marketplace isn’t expected to open until 2014. The plan is drawing mixed reviews.
Tim Sonder, president of Innovative Design & Graphics Corp., a two-person firm in Evanston, says he thinks the exchange will help him shop for the best price and features on health plans.
But Mary Goers, co-owner of Corporate Graphics of America Inc., a Chicago-based printer with 10 employees, says government doesn’t belong in health care.
“Premiums are promised to go up,” she says.”