Analysis of proposed health reform policies

Health reform has remained a hot topic throughout the recent months leading up to the presidential election. Here is a breakdown and analysis of a few proposals put forth during the 2016 presidential campaign.

Completely repeal Obamacare. Our elected representatives must eliminate the individual mandate. No person should be required to buy insurance unless he or she wants to.

Regardless of your political affiliation, I think we can agree there are many aspects of The Affordable Care Act (Obamacare) that have mitigated the current health care crisis. The law has mandated more comprehensive coverage of health plans, for example, dependents must be eligible up to age 26, there are no more lifetime limits

The Cadillac Tax and its implications for employers

The Affordable Care Act (ACA) includes an excise tax, called the Cadillac tax, scheduled to take effect in 2018. It was created in response to Congress’s notion that the unlimited, tax-free nature of healthcare causes inefficiencies and increased healthcare costs. The tax will be levied against employers who offer benefits programs that are deemed too excessive.  Its intended purpose is to slow the growth of healthcare costs, and generate revenue to balance out the ACA’s hefty $1 trillion price tag.

The IRS has been in a comment period regarding the Cadillac tax and is currently in a review process of the copious amounts of comments it has received.  Among the comments, the Council of Insurance Agents and Brokers (CIAB) “urges the IRS to keep in mind the overarching policy goals of the ACA, the potential adverse consequences of the tax for employees and their families, and the potential financial and administrative challenges for employers that seek to comply with the various (and sometimes competing) pieces of the ACA.”

Rising healthcare industry brings stand-alone tail coverage to mind

While technology, energy and other industry sectors often capture the headlines in the financial press and in the media, health care companies are a major economic force within the U.S. economy and growing. According to The World Bank, health care spending between 2010 and 2014 accounted for nearly 18% of U.S. GDP. This number is only expected to grow in the decade ahead. While some have argued that the PPACA will slow this trend, I find little evidence that it will do so in any meaningful fashion. All of this means that health care dollars spent in the U.S. will claim an increasing portion of our GDP.

Blue Cross of MA expands pay-per-performance system to PPO markets

The spotlight in local health care news this week shines on Blue Cross Blue Shield of Massachusetts and its continued efforts toward performance-based payment reform for doctors. This system that pays doctors based on how well they care for patients will expand to include more than one million members. For patients, this should mean a decrease in office visits and unnecessary testing, and an increase in individualized health management and post-procedural care.

Currently, a fee-for-service system accounts for 66 percent of the Massachusetts market. Specialists agree, this traditional practice – one where doctors are paid per patient visit, needle prick and procedure – encourages unnecessary testing and overbooking appointments, often under prioritizing patient health.

House votes to repeal Affordable Care Act

Since the law originally passed in 2010, many Americans have been closely watching the changing political environment to see what changes happen with the Affordable Care Act (ACA or Obamacare). Employers are watching Washington with an invested interest to see what rules they will need to comply with and which rules might change.

The most recent midterm election resulted in a swing of control to the GOP. Clients are asking what impact this change might have on attempts to repeal the ACA. Regardless of the GOP’s dominance in Congress and in the House of Representatives, WGA believes that Obamacare is not going away anytime soon.

Workforce classification: IRS guidelines critical for review

From tax codes to wage and hour regulations, employers must be extremely diligent when it comes to classifying their workforce. Business owners need to have a clear understanding of what determines whether the individuals providing services are employees or independent contractors, and as the tax season approaches, it’s a good time for businesses to review the IRS guidelines that distinguish between these two types of workers.
The following criteria should be used to classify independent contractors and employees:

1. Behavioral Control:
   • If an employer trains and directs work, including hours of work, what tools or equipment to be used, specific tasks to be performed and how the work is to be done, the worker is likely an employee. If the worker can set his or her own hours and works with little or no direction or training, he or she is probably an independent contractor.

Back from the polls – Election 2014 and what it means for the ACA

Last week’s events in Washington D.C. may affect PPACA as we now know it.

Most notable was the fact that Election Day turned most of the country into a sea of red leaving pundits to speculate on the future of PPACA. Will it prevail? Even with a GOP-controlled Congress, getting any legislation to completely overhaul PPACA through the President would be wishful thinking. Perhaps the most disconcerting is the Supreme Court’s recent decision to hear a new challenge to PPACA. Here we go again….what could this mean for employers? While it’s unlikely that we’ll see many fundamental changes for employer-provided benefit plans, it doesn’t mean there won’t be minor tweaks to the law and how its provisions are applied.

We had a couple of minor but unexpected changes already reminding us that the law’s provisions can change on a dime. First, after employers were scrambling to comply, it was announced

Attention doctors and drug makers: Sunshine Act database goes live Sept. 30th

On September 30th, the Centers for Medicare and Medicaid Services (“CMS”) will publicly release all sales and marketing expenses from drug companies to doctors and hospitals. While cost transparency tends to focus on medical providers and insurers, the financial relationships between drug manufacturers, physicians and teaching hospitals have become heavily scrutinized. The initiative, arising from a section of PPACA commonly known as the “Sunshine Act,” is part of nationwide effort to promote transparency throughout the healthcare industry. The law requires applicable manufacturers of covered drugs, devices, biological products and medical supplies to report to CMS information about payments made to physicians and teaching hospitals as well as any ownership and investment interests held. Submitting the information to a federal entity will hopefully reduce gifts and kickbacks that doctors sometimes receive when agreeing to use a drug company’s product. 

Control groups for benefit plans – Are you included?

Historically, employers have been able to provide different levels of medical benefits to their employees without much regard for what other companies in the same control group offered. The onset of PPACA, however, has caused employers to reexamine how benefits are handled in their control groups in order to ensure they are in compliance with the new regulations. Many have found it more efficient to partner with other control groups, a process determined by underwriting rules based on a percentage of shared ownership.  For purposes of PPACA’s employer mandate, there are three types of control group situations in which several companies can partner together and are therefore considered one employer. Doing so requires them to include all employees within the control group in the 50 (or 100) employee count threshold.

More losses for Mass medical carriers may shift risk tolerance for employers

Last week, the Boston Globe released an article highlighting significant first-quarter losses for each of the  three local nonprofit health carriers. The article highlights all of the new ACA taxes required by the insurer’s,  and how those new fees and taxes will be passed on in the form of higher premiums to fully insured businesses covered by Blue Cross, Harvard and Tufts.

Following the Globe’s report, WGA’s Chairman and CEO Phil Edmundson wrote a blog discussing some unexpected losses by both local and national insurance carriers based on unanticipated pharmacy costs to treat illnesses such as hepatitis. The specialty cost increases in the article are consistent with the rate changes seen by many of our own clients,  and an issue that should concern all businesses. Unfortunately, nothing under the Affordable Care Act was designed to get a handle on  pharmacy expenses,  and we anticipate an accelerated rate of cost increases due to pharmaceuticals.