Now that the Supreme Court has weighed in with their interpretation of the Patient Protection and Affordable Care Act (PPACA) most employers are left scrambling for answers. While thousands of articles, summaries, analysis, and opinions have been written about this legislation, most people are still left with more questions than answers. It is clear that most “experts” are more intent on shaping the reader’s opinion about the massive healthcare bill than they are in analyzing and explaining the real world impact of the new law. Maybe it is finally time to look for some real, practical analysis of PPACA.
The “middle of the road” (aka the loneliest place in the country)
Since the passage of PPACA in April of 2010, it seems a line has been drawn in the sand and every politician, pundit, regulator, consultant, healthcare provider and insurance industry executive has been forced to pick a side in the debate about the moral value of the law. The simple size of the bill (nearly 3,200 pages) has discouraged nearly everyone from reading what many agree is the most important piece of legislation in the last twenty years. Unfortunately, this has not kept many from offering their opinion of its content. While reading an opinion of the new law may be interesting (especially if the writer agrees with you!), it does not provide any real practical insight into the impact it will have on individuals and employers. After studying the law and speaking to hundreds of benefits attorneys, healthcare providers and insurance industry executives, I have found myself as one of the few people without a violent love or hate of PPACA.
What is clear is that the constant critiquing of the new bill has prevented many knowledgeable professionals from focusing on our real job, which is to develop strategies to assist employers and employees in understanding and implementing the new law. I believe that PPACA simply represents a good faith effort by well-intentioned politicians to solve a healthcare funding crisis in our country. Call me naive, but I do not believe that that the administration and Congress were trying to install a communist government, that we will have death panels or that we will have waiting lists for surgeries. On the other hand, I am not sure that PPACA will really get every citizen to participate in the insurance pool, that the typical citizen will find their health coverage easier to understand or that the health care costs will go down 30%. Our free enterprise healthcare system, funded by both private and governmental insurance, is very complex and any person experienced in our industry would have to acknowledge that any reform would have to be equally complex. Understanding the real facts about PPACA — what it does and does not do — can help employers implement the law effectively and identify areas where real cost savings can be found. In the end, those employers who quickly embrace this new reform (or the revised version, or even its replacement) will be best prepared to take advantage of many of their competitors who are still on the sideline complaining about whatever reform is put in place.
Stop, do not pass GO!
PPACA is a very complex law that regulates a wide range of components in our healthcare system. It would be impossible to summarize the entire law in even a single book, much less this brief article. Instead, the purpose of this summary is to focus on the key components that directly affect employers and their group health plans. Even with that narrowed focus, we are omitting discussions about minor parts of the bill such as the Cadillac Tax (which will apply to a very small number of plans), coverage of birth control and the health plan tax to fund comparative research.
First, it is important to understand that PPACA does not apply to every employer. Small employers with less than 50 full-time equivalent employees are not subject to the penalty portion of the bill. In fact, small employers may be eligible for incentives to install a group health plan if they do not currently offer one and to add a wellness program to their new or existing plan. Small employers that do not meet this definition may have a strong opinion about PPACA, but should understand that in practice they will not be significantly impacted by the law. The most significant change for them will be the introduction of a health insurance exchange, run by either their own state or the federal government, which will give them an option of selecting coverage from approved carriers. At this time, it looks like the plans to be offered by the carriers will include many of the traditional plans currently available (all meeting the new minimum coverage criteria) with the addition of some new limited plans with limited provider networks at a lower cost. A small employer can choose to buy coverage through the exchange or continue to purchase group coverage through his or her current broker or carrier.
It’s a simple game