Healthcare from the Employers’ Perspective
As an attorney and human resources expert, Senior HR Consultant for Associated Benefits and Risk Consulting Bret McKitrick’s wheelhouse includes corporate training, counseling on hiring and firing and a variety of other HR-related issues. One of the biggest issues in his world these days is healthcare.
Affordable Care Act
President Donald Trump has expressed a keen interest in repealing the Affordable Care Act, sometimes known as Obamacare, which was implemented during his predecessor’s tenure. He recently supported a bill that, had it passed, would have repealed the mandate within ACA that everyone must purchase insurance and that employers with 50 or more employees provide insurance.
“Obamacare-provided health insurance (provided insurance) for a lot of people that did not otherwise have access to health insurance because insurance companies, prior to 2010, could turn people away for preexisting conditions or exclude people from coverage,” McKitrick said. “The Affordable Care Act changed that. Now, how they changed it was by putting in place a lot of parameters that insurance companies had to play within as well as employers that sponsored health insurance.”
ACA Employer Mandate
McKitrick breaks down the employer mandate portion of the ACA.
“So … how’s this impact maybe an employee of an organization with their employer-sponsored health insurance, for instance?” McKitrick said. “Well, there’s something called the employer mandate that’s part of the Affordable Care Act that says ‘hey, if you’re an employer and have at least 50 full-time employees, you must offer some kind of affordable coverage to full-time employees and their dependents. And if you don’t, you as an employer may be faced with one of two types of penalties that the IRS would assess.’”
The employee mandate triggered a variety of reactions from employers.
“Ok, that changed the game for employers,” McKitrick said. “We saw back when this started and it came into effect in 2014, we saw many employers – especially in the hospitality industry, retail and restaurant industries – cut people’s hours to avoid them having that full-time staff, to avoid them paying health insurance. That changed the game for a lot of those individuals. If we take that provision away, what’s that mean to an organization now? Are you going to go back and change people’s hours again? Are you going to change your eligibility requirements?”
Most employers are now accustomed to this healthcare environment, McKitrick notes, and have figured out how to operate within it. Large-scale change – should it occur – could present a lot of legwork for companies as they work to undo what’s been put in place.
ACA Individual Mandate
“From an insurance carrier perspective, let’s look at this as an example, because I think it really illustrates the point here (regarding) … the individual mandate, that was the portion of the Affordable Care Act that said hey every taxpayer and taxpayer spouse and taxpayer’s dependent must have some kind of minimum health insurance coverage, and if they do not, that taxpayer would be assessed a penalty,’” McKtrick said. “Okay, it was (what is referred to as) a reverse incentive. (For instance,) America wants people to buy homes, they give them mortgage deductions."
McKitrick dives into what this individual mandate – this reverse incentive – looks like.
“This was a reverse incentive trying to get people to do what? Have health coverage. That’s how Obamacare enabled the 20 or 50 million or whatever the number was at the time, to jump on to plans that they otherwise didn’t have.”
“Now the quid pro quo with that was in order to be able to do that and keep the health insurance companies from saying ‘hey we don’t want these people who were higher risk if they were uncovered before …’ If you make people have health insurance, or incent them to have health insurance, you can’t have an insurance company turning them away for a preexisting condition. So in order for insurance companies to buy into that and actually offer coverage to this sicker population, that individual mandate had to be in place to require people to have coverage so that the insurance companies could enjoy healthier times of individuals having coverage and not just that higher risk pool.”
McKitrick notes that the failure of the new healthcare plan to pass could still have negative repercussions.
“… What we’re seeing is insurance companies still pulling out of certain states – look at Ohio for instance where insurance companies said we cannot make any money in this individual market, the risk is still too high,” McKitrick said. “That really is on a state by state basis, depending on the market structure setup. So I think it’s failing in some areas and succeeding in others.”
Changes Could Prove Difficult.
“I think that’s one of the problems with the straight ‘repeal and don’t replace,’” McKitrick said. “… I think there’s a little bit of danger in that going back to 2010 … turning back the clock probably isn’t going to be the best answer for all patients, consumers and quite frankly even the health insurance companies because they’ve made plenty of changes just to get up to speed where they are right now.”
Even those who may have been against ACA initially have learned how to make it work, McKitrick notes.
“I think they have come to a point where they’re working through the challenges, have worked through the challenges of it, the compliance obligations for instance that employers are facing now that they didn’t before Obamacare. I think in that regard they’ve worked through these, they’re sort of on, I hesitate to say autopilot, but things are running somewhat smoothly for them and I don’t think it’s a real detriment to currently have it for a lot of employers.”
Regardless of Legislation, Health of a Workforce an Important Aspect
“Employee wellness even beyond health is so important for absenteeism rates, engagement, productivity at work and having people with health insurance and setting their minds at ease whether they’re getting that through their employer or as an individual through the marketplace, does make a happier and healthier employee.”