"I don’t think there’s any employer that’s planning on paying that tax,” said Steve Wojcik, vice president of public policy for the National Business Group on Health, which represents large employers.
We've reached the anticipated crossroads with healthcare in America where the elephant in the room question employers are asking themselves is: "To what degree should employers even be in the healthcare benefits business?"
It may have been an unintended effect of Obamacare, since, on its face, the Affordable Care Act requires employers with 100+ employees to provide health care plans that meet the minimum requirements stated in the law. And, unless the deadline changes again, employers with 50 to 99 employees will be required to provide the same coverage beginning in January 2016.
This requirement is juxtaposed to the anthem "consumer-driven health-care."
As an ACA tax on "Cadillac" health insurance plans looms closer, large employers are answering that question by increasingly ending their most generous health-care coverage.
Companies are shifting more costs to workers, introducing higher deductibles and co-payments, rising premiums and controversial wellness programs that carry penalties for employees who don't comply. Employees from bankers at JP Morgan Chase & Co to college professors at Harvard University are seeing a range of moves towards consumer-driven healthcare.
Interestingly enough, there is concern in some corners that requiring employees to shoulder more of the cost burden may undermine support for Obamacare just as Congress, now firmly under Republican control, considers new ways to gut the law.
"I don’t think there’s any employer that’s planning on paying that tax,” Steve Wojcik, vice president of public policy for the National Business Group on Health, which represents large employers, said in a phone interview.
“It doesn’t help the company, it doesn’t help the employees, it doesn’t help the shareholders,” he said. “It doesn’t really help anybody.”
The tax takes effect in 2018, and employers are already being proactive to make sure they don’t have to pay the 40 percent surcharge on health-insurance spending that exceeds $27,500 for a family or $10,200 for an individual.
The idea behind the tax was that it could be a tool to slow the nation's growing health-care tab. Employers, who have traditionally used "Cadillac" plans to lure top talent, are quickly reconfiguring, meaning higher out-of-pocket health-care costs for workers.
The slowed growth in health-care premiums since the Patient Protection and Affordable Care Act took effect in 2010 credit the tax on Cadillac plans -- named after the luxury vehicle to denote their lavishness -- as one reason.
Last year, average family premiums rose 3 percent to $16,834, while single premiums held steady at $6,025, according to the Kaiser Family Foundation. Companies with a large percentage of high-wage workers paid more, with an average of $6,244 for single coverage.
Employees' portion has been gradually increasing since 2011, when it was 42 percent. Among employers with 200 or more workers, 51 percent had employees paying one-quarter or more of their premiums for family coverage last year, according to Kaiser’s report in September.
Employers who have traditionally offered generous benefits to lure top professional talent, or who have conceded to demands from labor unions for better health benefits, are most susceptible to the tax, Wojcik said. Many are responding by imposing new requirements on workers and reducing their health benefits.
The tax “is having the effect that was intended, which is the cost of these plans are being reduced,” Christopher Condeluci, a former Senate Republican aide who helped design it, said in a phone interview. "Sadly, the way in which they’re being reduced is they’re shifting more costs onto the employees.”
Employers who have traditionally offered generous benefits to lure top professional talent, or who have conceded to demands from labor unions for better health benefits, are most susceptible to the tax
Consumer-driven health-care? Why is this a surprise?
Premium increases for employer-provided health insurance, which covers about 48 percent of Americans, “slowed markedly” in 31 states since 2010, the year the Affordable Care Act became law, the New York-based Commonwealth Fund reported. Nationally, premium growth fell by about a percentage point after the law, to 4.1 percent a year on average, the report said.
Deductibles, however, have more than doubled in all but six states since 2003, the report said.
“Workers are paying more but getting less protective benefits,” the report’s authors said. (This is where voluntary comes in, to fill gaps, and with a blend approach, companies can save as much as $200 per employee per month. It's about being creative.)
JPMorgan adopted a carrot and stick approach and expanded its wellness program for 2015, requiring workers to complete a biometric screening and an online questionnaire in exchange for $200 in a savings account for medical expenses. Employees who don’t comply will pay $500 extra for their insurance premiums.
The bank also raised its insurance premiums for workers and even more for their spouses, who “have higher claims, on average,” it said in an employee brochure.
JPMorgan employees pay about 25 percent of the cost of medical coverage, with the company covering the rest, according to enrollment materials. Higher-salaried workers pay more for coverage.
Andrew Gray, a spokesman for the bank, declined to comment.
George Washington University in Washington eliminated its most generous health plan this year because it would have been subject to the tax, the school told employees in a benefits guide.
“Primarily as a result of this significant future tax liability, GW will no longer be offering this plan after 2014,” the university said. Employees can select from three health plans, including a new one that carries a deductible of at least $1,500, almost twice as much as the next-highest plan.
There still seem to be some fundamental elephant questions that remain:
-Should we have first tackled accountability and transparency in health-care costs as a country and then targeted health-care premiums? Is the tail wagging the dog?
-Doesn't a "consumer-driven" health-care model mean the consumer is responsible for paying as well as the consumer deserves accountability and transparency to lower costs as with any other product/service they purchase?
-Does America expect employers to be in the health-care benefits business or the making widgets business? Which makes more economic and common sense?
I realize I'm in the business of providing group health benefits -- but I believe in balance, individual responsibility, and, yes, common sense. I see myself as even more in the business of supporting business -- and healthy business is healthier for America and every American worker.
The more businesses can focus time and resources on business, the more employees can share in that success.
The more responsibility individuals have in purchasing their own health care, the more responsible health-care providers will have to be in what they charge.
It's time to pull health-care into the realm of responsible and competitive business with the rest of us.
What do you think?
Source: Bloomberg, Alex Wayne and John Lauerman Jan 8, 2015, http://www.bloomberg.com/news/2015-01-07/lavish-cadillac-health-plans-dying-out-as-obamacare-tax-looms.html
Rylan Klaseen & Associates
Rylan Klaseen & Associates
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