By Rose Hoban
According to Jay Wooten the requirements under the Affordable Care Act that people have health insurance was a good thing. His Raleigh-based trucking and moving business was large enough he had to provide the coverage, and it cost him money.
“We used it as a retention tool. We want people to have insurance, health care is a big problem,” he said during an interview in December.
Wooten said he understands that costs increase for everyone when uninsured people end up in the hospital and the hospital has to pass along increased costs to everyone else. And if an employee gets sick, then it becomes a problem for him if that person is uninsured.
“I think if the individual mandate is taken away from the law, I don’t think employees will purchase health insurance,” he said.
Nonetheless, Wooten felt he couldn’t vote for Hillary Clinton and, instead, cast his ballot for Pres. Donald Trump, despite Trump’s promises to repeal and replace the law.
“It wasn’t an exciting vote,” he said. “He actually scares the hell out of me.”
Wooten was among several dozen business leaders who spent an early evening happy hour listening to presentations by analysts from Hill, Chesson and Woody, a Triangle-based employee benefits management firm. They were looking for guidance as to what they might have to do next about health benefits in the wake of a likely Congressional repeal of the Affordable Care Act.
Speculation then, and now
“Just 6 years ago, we were talking about the ACA and we enjoyed a great amount of speculation as we watched it pass and we wondered what was in it,” said Skip Woody, one of the principals of the firm, which has clients mostly in North Carolina and the Southeast.
Woody said since then, the government has created thousands of pages of regulations and his customers have created mechanisms to comply with the law.
“Now we have 140 characters that we will be drawing off of,” he told the crowd. “Most of Trumpcare policy has been delivered in sound bites via a cell phone.”
But Woody did say he believed it would take some time to undo the law.
“As [House Speaker] Paul Ryan said, the knot of all the different regulatory bodies and rules is too tight and the fingers stretch out too far,” he said.
He also speculated this year would likely look the same as the last for employer-sponsored plans.
“Do I think you should just forget about doing your reporting this year? No. Should you stop making coverage affordable? No. Should you stay in compliance with all of the current regulations? Yes.”
That analysis was echoed by Elliot Bernak, an attorney who advises clients of Mercer, a national consulting and benefits management company based in Washington.
“[Congress is] facing really a Rubix Cube in terms of the policy, political and legislative process considerations,” Bernak said.
Employers still primary
No matter the form the Congressional repeal of the Affordable Care Act takes, Woody and Bernak told their clients that under whatever plan emerges, employers are likely still going to be the people providing health coverage for most working people.
But some things will change. For one thing, the so-called Cadillac tax on rich health insurance benefits offered by businesses probably will go away, to be replaced by something similar.
“Instead of having [an] unlimited amount you can have in your program, they’re going to cap the amount of the health care plan you offer,” Woody said. “There’s this idea that the most generous plans are 10 to 15 percent higher than what insurance should be, so this will limit the amount of flexibility you can have to offer the richest benefits.”
Both men speculated that much of the replacement would consist, instead, of moving more people into high deductible plans combined with health savings accounts, or HSAs.
“It does have some good attributes to it, in terms of it requires you to know what things cost, because you pay out of pocket,” Woody said. “We know that these plans are less expensive, but it’s not necessarily going to change the way things are financed or the escalation of costs across the country.”
Bernak said an idea gaining ground on Capitol Hill is for so-called Roth HSAs in which either employers or federal or state governments could deposit funds that individuals can use to buy health insurance or cover their out-of-pocket costs.
“It would end up being a delivery mechanism for tax credits,” that are preferred by Republicans in Congress, Bernak said.
“But it’s also becoming clear that they’re going to have to show a few cards of what a replacement plan will look like in order to keep moderates on board,” he said.
Coverage and drugs
For individuals who have purchased insurance on the individual market exchanges, some 11 million people, Bernak said those are not likely to disappear anytime soon, either.
“[Congress] may tighten up exchange enrollment rules or regulations, something that’s being urged by people in the insurance industry,” he said. Bernak noted that cutting off that many voters would be a problem for lawmakers. “They may decide to keep the same federal subsidies for low income folks that they’ve actually sued to stop.”
“Given the prospect of major disruptions and people losing coverage, this issue could be a catalyst for a bipartisan replacement package.”
Bernak also said there’s likely to be some movement around changing regulations for new drugs. In the past, Trump has said the pharmaceutical industry has “gotten away with murder” in its pricing. But he said it probably wouldn’t be anything “big, like allowing Medicare to negotiate prices.”
“Probably it would be more along the lines of increasing pricing transparency and getting generics to market faster,” he said. “But this is obviously a hugely contentious issue.”
In the end, both men predicted that the process will unfold more slowly than the administration might want.
“Repeal and replacement won’t necessarily happen in two fell swoops, but will be done in a series of bills,” Bernak said. “Republicans have boxed themselves into a corner with their promise to first completely get rid of the law before replacing it. And Trump has turned up the pressure with his recent call for simultaneous or near simultaneous repeal and replace.”
In the meantime, Bernak said he’s standing with most of his clients, who are employers both large and small, “In ‘wait and see’ mode.”