Employers Will Maintain Plans Under Reform

Many employers will continue to maintain health coverage under health reform, but for small employers that won’t be so easy, as they continue to be hit hard by health care costs, according to two recent surveys.

Employers Already Deciding Whether To Keep Coverage After Health Reform

Almost one-half of organizations have decided not to drop health care coverage for employees as a result of the new health care reform law, the Society for Human Resource Management (SHRM) found in a new poll released on June 28. Less than 2% of organizations surveyed said they have decided to drop coverage in light of passage of the Patient Protection and Affordable Care Act..

In its poll, “Organizations’ Response to Heath Care Reform,” SHRM found that 46% of organizations surveyed this month would not be ending health care coverage for employees because such a move would lower employee morale and job satisfaction. Organizations also cited competitiveness in recruiting and retaining employees and the fact that they value the health of their employees as reasons.

“Early indications are that employers are taking a prudent and thoughtful review of the implications of the health care reform law on their plans," said Michael Aitken, SHRM’s director of governmental affairs, "and that’s good news.”

Added Mark Schmit, SHRM’s director of research: “HR professionals and business leaders are taking an analytical approach to the decisions that they are making as a result of the new legislation. This is a strategic issue in which organizations are clearly recognizing the need to consider the costs in both monetary and human capital terms.”

Cost savings is the primary reason organizations would be likely to drop health care coverage and pay resulting opt-out fines. But for half of the respondents, it’s too early to know whether they will take such action.

Of the organizations that have decided not to drop health care coverage, 34% made the decision without conducting a formal analysis to determine the impact that reform will have on their health care plans. Twelve percent did an analysis before concluding that they would not end coverage, while 22% are currently conducting an analysis.

Overall, 41% of organizations are likely and 23% are highly likely to pass along any increased costs of health care coverage to employees next year, regardless of whether the increases are related to reform or not, the survey showed. And 34% of organizations are considering alternative health care plans — health savings accounts, for example — for employees as a result of health care reform.

The health care reform poll surveyed 819 randomly selected human resource managers and compensation and benefits professionals at private, public and government organizations with 50 or more employees. It was conducted June 16-23.

For more information go to http://www.shrm.org.

High Costs For Employees In Small Businesses

In the second survey, nearly 13% of workers with employer-sponsored health plans who worked in firms with 10 or fewer employees had premiums of $7,200 or more a year for single-coverage plans in 2008. These results are in a a recent  News and Numbers from the federal Agency for Healthcare Research and Quality. This amount is significantly higher than the $4,704 average, national premium for employer- sponsored single-coverage health plans in 2008.

The federal agency's analysis also found that:

• By comparison, only about 4% of workers enrolled in plans sponsored by large businesses - with 1,000 workers or more - had premiums of $7,200 or more for employer-sponsored, single-coverage health plans. The national average premium in large business for this type of coverage was $4,340.


• For family coverage, about 7%  of enrolled workers in small businesses had premiums of at least $19,000 in 2008, but only about 4.5% of employees in large companies had premiums that high. The national average premium for a family-coverage health plan in 2008 was $11,650 (less than 10 employees) and $12,595 (1000+ employees), respectively.


• Across all businesses, 5% of employees with single coverage had premiums of $7,200 or more, while 5% of employees with family coverage had premiums of $19,000 or more.

The data in are taken from the Medical Expenditure Panel Survey (MEPS), a detailed source of information on the health services used by Americans, the frequency with which they are used, the cost of those services, and how they are paid. For more information, go to http://www.ahrq.gov/news/newsnumix.htm.

Mental Health Parity Rules Eased

Mental health parity rules implementing the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (MHPAE) apply to qualified health plans in the Patient Protection and Affordable Care Act in same manner as they apply now group health plans, and on July 1 the Employee Benefit Security Administration made it a little bit easier to apply those parity rules

EBSA has provided a temporary safe harbor for outpatient mental health benefit provisions that commonly require a copayment for office visits (for example, physician or psychologist visits) but coinsurance for other outpatient services (for example, outpatient surgery, facility charges for day treatment centers, laboratory charges, or other medical items).

Interim final rules to the MHPAEA state that separate sub-classifications for generalists and specialists generally are not allowed except as permitted for multi-tier prescription drug formularies. The safe harbor extends that sub-classification allowance to office visits and non-office visits.

However, in a July 1 FAQ, EBSA noted that until final rules are issued, an “enforcement safe harbor” will allow a plan or issuer to divide its benefits furnished on an outpatient basis into two sub-classifications for purposes of applying the financial requirement and treatment limitation rules under MHPAEA, as follows:

(1)   office visits, and

(2)   all other outpatient items and services.

According to EBSA, “After the sub-classifications are established, the plan or issuer may not impose any financial requirement or treatment limitation on mental health or substance use disorder benefits in any sub-classification (i.e., office visits or non-office visits) that is more restrictive than the predominant financial requirement or treatment limitation that applies to substantially all medical/surgical benefits in the sub-classification using the methodology set forth in the interim final rules.”

The FAQ is at http://www.dol.gov/ebsa/faqs/faq-mhpaea.html

For a comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform and other developments in employee benefits, just click here.

High Risk Pool In Place, Public Health Efforts Launched

On July 1, Kathleen Sebelius, Secretary of Health and Human Services announced the implementation of “a new Pre-existing Condition Insurance Plan (PCIP) that will offer coverage to uninsured Americans who have been unable to obtain health coverage because of a pre-existing health condition. The PCIP is a provision of the Patient Protection and Affordable Care Act which established a temporary high risk insurance pool program for individuals who have been uninsured for six months or who have been denied health insurance coverage because they have preexisting conditions.

States, many of which have their own high-risk pools, have the option of running a PCIP themselves or having HHS run the plan. Starting on July 1, the national PCIP opened up to applicants in these 21 states where HHS is operating the program: Alabama, Arizona, Delaware, Florida, Georgia, Hawaii, Idaho, Indiana, Kentucky, Louisiana, Massachusetts, Minnesota, Mississippi, Nebraska, Nevada, North Dakota, South Carolina, Tennessee, Texas, Virginia, and Wyoming. The remaining 29 states, which are operating their own PCIP, will begin enrollment by the end of the summer, with many beginning enrollment on July 6.

HHS set up a consumer Website linking individuals directly to the federal application page for residents of states where the HHS is running the PCIP, and providing information on how and where to apply for residents of states with their own PCIP.

Also on July 1, the National Prevention, Health Promotion, and Public Health Council submitted its first status report to Congress. The Affordable Care Act provided for the creation of the Council and mandated the development of a National Prevention and Health Promotion Strategy. This strategy is to take a community health approach to prevention and wellness and identify and prioritize actions across many sectors to reduce the incidence and burden of the leading causes of death and disability.

The Council Chair is the U.S. Surgeon General Regina M. Benjamin; council members include Cabinet Secretaries, chairs, directors, or administrators of federal departments. The members’ organizations will be involved in developing and implementing disease prevention and health promotion and wellness programs within their jurisdictions.

The Affordable Care Act requires that the Strategy establish actions within and across federal departments and agencies relating to prevention, health promotion, and public health according to science-based prevention recommendations and guidelines. The Council identified the following guiding principles:
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1. Prioritize prevention and wellness and high impact interventions.
2. Establish a cohesive federal response.
3. Focus on preventing the leading causes of death, and the factors that underlie these causes.
4. Promote high-value preventive care practices, health equity, and alignment between the public and private sectors.
5. Ensure accountability.

The Council’s 2010 Annual Status Report outlines the preliminary work carried out from March to June 2010, including an overview of the Strategy development process, proposed guiding principles, plans to convene the Advisory Group, a work plan and timeline, and a list of Council activities to date, including the preparation of the Annual Report to Congress.

Preliminary analysis includes a review of data on the leading and underlying causes of death, and identify and conducting a preliminary review of existing national prevention plans and strategies (U.S. and international. The Council’s Annual Report also presents guiding principles, data on the leading and underlying causes of death, examples of current federal programs, and brief descriptions of types of interventions that will form the basis of the National Prevention and Health Promotion Strategy.

Thus, implementation of the various health reform provisions continues apace.