Tag Archives: healthcare plans

What Will Compensation Trends Be in 2014?

imagesFor HR professionals engaged in setting compensation scales and pay increases for 2014, it is important to be aware of signals from the labor market.

According to the Bureau of Labor Statistics in the Department of Labor,

“Compensation costs for civilian workers increased 2.0 percent for the 12-month period ending December 2013, essentially unchanged from the December 2012 increase of 1.9 percent. Wages and salaries increased 1.9 percent for the current 12-month period. In December 2012 the increase was 1.7 percent. Benefit costs increased 2.2 percent for the 12-month period ending December 2013. In December 2012 the increase was 2.4 percent.”

The BLS figures for private industry workers are similar.

The Consumer Price Index increase for the same period was 1.6%.  If prices are increasing at less than 2% per year, then a 2% increase in wages would provide some growth in real earnings for employees, albeit a small growth.

However, the Society for Human Resources Management says that average base pay increases for 2014 will be about 3 percent for the second year in a row in the U.S. SHRM’s source is the Compensation Planning Survey by Buck Consultants.  A 3% growth in wages would provide more relief to workers still buffeted in a struggling economy.

Yet one study from Payscale.com said that wages would increase by 4.5% in 2014.  See their Compensation Best Practices Report, 2014—The Year of The Great Balancing Act. I think this study is an outlier, and wage increases in most categories are likely to be in the 2-3% range.

Nevertheless, I do believe 2014 is likely to be a balancing act for employers in determining how to pay their employees. In a year where healthcare costs are uncertain and the prognosis is changing daily, setting wages is harder than ever.

coins imageWorkers, of course, care more about their personal wage increase than about averages. Employers continue to try to differentiate pay increases based on performance, according to SHRM. This means that more employees will receive less than 3% increases than receive more.

Most employers I’ve worked with recently have increased wages 2% or less each year for the past few years. I work with several non-profits, and their pay budgets remain extremely tight. They are less likely than for-profit companies to differentiate their increases based on performance, in part because little differentiation is possible with only a 2% increase budget.

We all hope that at some point the economy and the job market will improve. The question for employers—for-profit and non-profit employees alike—is when.

Another question is how employers can anticipate that point of improvement. And a third question is what they can do to retain their best employees—with compensation and with other tools for employee retention.

For more on compensation trends for 2014, see

2014 Salary Trends That Will Impact Staffing, by John Rossheim, on Monster.com

2014 US Salary Planning Information, from the Hay Group

2014 Compensation and Governance Outlook Report, from Equilar

What are your thoughts about increasing wages for your employees, and about employee retention generally?

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Obamacare and the CBO Report: The Truth Is in the Middle

800px-Capitol_Building_Full_ViewLast week’s kerfuffle over the Congressional Budget Office (CBO) report on Obamacare, like most kerfuffles, had some truth on both sides of the debate. The CBO report says that the equivalent of 2 million full-time jobs will disappear by 2017, and 2.5 million by 2024, in part because people choose not to work at all or to work fewer hours. Is this a liberation of the oppressed American workforce or a death-knell to the American work ethic? Obviously, it is neither completely.

The Affordable Care Act grants subsidies to lower and middle income families to buy health insurance on the exchanges. Subsidies are just a way to give people money, albeit money with restrictions. In this case, people get the money (the subsidy) only if they buy insurance.

If you give people money, they have more choices. People will always choose to use the money in ways that they think will benefit themselves. Some of their choices also benefit society, and other choices do not.

Source: National Cancer Institute

Source: National Cancer Institute

With respect to healthcare, most people have had their health insurance subsidized by someone in the past.  Many received subsidized health insurance from their employers. Many others were covered by Medicare or Medicaid government subsidies. Only those on the individual market who could not tap into a high-risk pool paid for the insurance entirely on their own.

The Affordable Care Act now grants many people another government-subsidized option—health insurance purchased through the federal and state exchanges. So what choices are likely to make as a result of this new option? And will those choices benefit society or only the individuals involved?

  • People will quit jobs they don’t like because they no longer need employer-subsidized healthcare. This is the “benefit” described in the CBO report that the Democrats are touting.

It is true that many employees have stayed employed at a particular workplace only because they need health insurance. Prior to the ACA, employees younger than 65 may only have had the choice of employer-subsidized health insurance or unsubsidized private insurance that they thought cost too much. A second earner in a household might have been working primarily to provide health insurance, rather than because the family needed the salary. Those with pre-existing conditions didn’t feel they could get insurance if they changed jobs or quit work.

So “job lock” is real. Anyone who has worked in Human Resources or managed a workforce knows that many employees would rather be doing something other than working, and often their motivation for staying is related to insecurities around healthcare.

To the extent that the ACA has de-linked health insurance from the workplace, Republicans should extol this benefit. The problem is that the ACA doesn’t de-link insurance and employment. The ACA in fact imposes substantial penalties on employers if they do not continue to provide health insurance to employees. The ACA provides subsidies to employees but increasing costs on employers.

  • People will work less to keep their ACA subsidies. This is the impact of the ACA described in the CBO report that Democrats ignore and Republicans squawk about.

Many government programs give money to people but reduce the amount they receive as their income increases. Most of those programs therefore cause people to question whether they are better off maximizing their government payments or maximizing their income. Some will choose to work less to receive a larger payment from the government. Clearly, ACA subsidies will cause some of this behavior.

Moreover, it appears from the CBO report that lower income workers are more likely to decrease their work hours in response to the ACA. That is because they receive the greater subsidies, and the trade-off between their salaries and their ACA subsidies is more likely to favor the subsidy.

These choices to take the subsidy rather than work more for pay may benefit the individual, because non-working hours are valuable for family, hobbies, and other personal priorities. But the choices do not benefit society, unless someone else performs the same work for less pay or more work for the same pay. If productivity from new workers does not increase sufficiently to cover the cost of the subsidy, then society is worse off.

Even most conservatives believe that some redistribution of income to the poor through government programs is desirable; the question is how much. While I don’t think the ACA itself is the tipping point, I do believe that it will incent some people who could work more to instead work less, and in many cases, that will not benefit society.

So the CBO report contains ammunition for both sides of the Obamacare debate. While I believe the conservative arguments in response to the CBO report are over the top, I also believe that the liberal arguments are ignoring the very real likelihood that the ACA subsidies will decrease productivity.

The bottom line is that after the CBO report, the political argument around the ACA remains what it always has been—a debate on the role of government. Is it better for people to work less and receive more government support at taxpayer expense, or is it better to spend less on government programs and make people cover more of their expenses themselves? Should we redistribute income or not?

For employers, however, Obamacare is still bad news. Employers remain on the hook to provide subsidized health insurance to their workers or face substantial penalties. Moreover, the disparate taxation of employer-provided healthcare and privately purchased healthcare continues. In these ways, the labor market continues to be skewed, and therefore I still believe that the ACA has not moved healthcare in this country in the right direction.

For one of the more reasoned discussions of the CBO report, see Obamacare: ‘Job-killer’ or freedom from ‘job trap’?, by Linda Feldmann, Christian Science Monitor, February 6, 2014.

For a good articulation of the philosophical arguments on the role of government, see Leaving Work Behind, by Ross Douthat, New York Times, February 8, 2014.

What are you hearing from your employees about the Affordable Care Act these days?


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Next Week’s Launch of the ACA Healthcare Exchanges

doctor holding an injectionIn August I wrote about the ACA navigators and the difficulties of getting them ready to enroll people in healthcare plans through the healthcare exchanges that launch on October 1. Now we are just a week away from opening these healthcare exchanges.

As of last Friday, problems were still surfacing. The Wall Street Journal reported on September 20 that the software programs in many exchanges had glitches in reporting the pricing of the plans sold on these exchanges. See Pricing Glitch Afflicts Rollout of Online Health Exchanges, by Christopher Weaver, Timothy W. Martin, and Jennifer Corbett Dooren, September 20, 2013.

Although I am not a fan of Obamacare generally, I do support the concept of healthcare exchanges. I think it is a good idea to help consumers compare the costs and terms of plans available to them in the marketplace.

The transparency in pricing various healthcare plans that exchanges provide is helpful. If we could also get transparency from doctors and hospitals and other healthcare providers, we might begin to get some control over healthcare costs.

My beef with the exchanges is that I don’t like the federal government running them—nor the states, for that matter. I prefer the private exchanges that are springing up, such as those offered by Aon, Aetna, and other insurers. I trust private entities to run these exchanges more efficiently and accurately than the government.

Nevertheless, I hope that the public healthcare exchanges get off to a good start. I just don’t think it is likely that they will, given their slow start.

My real problems with Obamacare lie in the minimum essential coverage requirements and the affordable coverage requirements. I believe that a wider variety of plans should be available to consumers, so that we can pick among a broad range of healthcare insurance products that best meet our families’ needs.

HHS sealInstead, Obamacare has imposed countless requirements in a variety of healthcare areas. Those regulations are still being issued, even as the law goes into effect. Nancy Pelosi’s famous statement that Congress would have to pass healthcare reform to know what’s in it wasn’t even accurate—it is only once Health & Human Services issues final regulations that we really know what is covered.

Meanwhile, the uncertainty that employers have in what their costs will be have been—and will continue to be—a drag on their decisions to hire and increase employees’ hours and wages.

Although I am hopeful that the launch of the exchanges will go smoothly, I do not expect it. I expect continued confusion in the healthcare arena for years to come.

What do you expect around the launch of the Affordable Care Act, in the short term and the long term?

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Complex Impact of DOMA Decision on Employee Benefit Plans

In mid-June, I wrote about the potential impact of the Supreme Court’s same sex marriage opinion on employers. Well, now we know what that impact is – or rather, now we know what we still don’t know.

The Perry v. Hollingsworth decision from California is likely to only impact employers in California. But the U.S. v. Windsor decision holding that Section 3 of the Defense of Marriage Act (DOMA) is unconstitutional will impact employers across the nation. Unfortunately, the Windsor decision raised as many questions for employers as it answered.

Because the Court only overturned Section 3 of DOMA, the rest of DOMA remains in place. Most importantly, the Court did not mandate that same-sex marriages be recognized, nor did it overturn Section 2 of DOMA. Section 2 provides that the states are not required to give effect to same-sex marriages entered into in other states. Therefore, the federal laws related to marriage must still accept each state’s definition of marriage.

What does this mean for employers? We are only now beginning to figure this out. We will need to wait for guidance from the myriad federal agencies that regulate and enforce the federal laws related to marriage. In essence, however, it means that employers will have to adapt to a variety of definitions of marriage in different states.

Here are a few of the many recent articles on the impact of the Windsor decision on employers: from the Littler law firm, from SHRM, and from two benefits consultants (Towers Watson and Aon Hewitt).

Major issues after Windsor include:

  • Which state’s law should an employer consider – the state where the employee resides, the state where the employee was married, or the state where the employee works? The answer may vary depending on what federal right or benefit is involved. Moreover, keep in mind that Windsor said nothing about civil unions, domestic partnerships, or anything other than that where same-sex marriages are recognized by state law, they must be recognized for federal purposes.
  • Can multi-state employers standardize on a single practice for their benefit plans (probably using the most liberal definition of marriage and spouse), or will they have to have multiple methods of administering their plans, depending on state law? Most likely, they will a complex maze of plan administration – because for some purposes same-sex partners who have married will be spouses and entitled to certain benefits, and sometimes same-sex partners (whether married or unmarried) will be prohibited from claiming other benefits.
  • What differences will there be under ERISA’s requirements for pension plans and welfare plans? As with most benefit plan issues, the starting points are not only the requirements set forth in statutes and regulations, but also the language of the benefit plan documents. Spouses have more rights under pension plans (for example, for purposes of spousal notice requirements, mandated survivor benefits, and qualified domestic relations orders) than under welfare plans (where definitions in plan documents and insurance contracts may adopt different definitions than required in pension plans).
  • When does Windsor become effective? Is the Windsor decision retroactive? In other words, how soon must employers have systems in place to accurately record same-sex marriages, and must employers un-do and re-do a variety of past benefit plan actions, such as distributions? That’s why employers need prompt guidance from the IRS, DOL, SSA, and other regulatory agencies.

Employers can assume that the Obama Administration will issue guidance that favors quick, and maybe even retroactive, recognition of same-sex marriages. So HR professionals and corporate executives involved with benefit plans need to stay on alert. Read the linked articles in this post for a good start in understanding the specific complications the Windsor decision has raised.

What issues has the Windsor decision raised for your benefit plans?

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If You Liked Your Health Plan Before Obamacare, Sorry, You Can’t Keep It

presidential sealIn an op-ed in the Wall Street Journal on February 1, Daniel Kessler described four promises behind the Affordable Care Act (ACA, popularly known as “Obamacare”) that had not been fulfilled. This post focuses on the third broken promise Kessler mentions – “If you like your health care plan, you can keep it.” The Obama administration began breaking that promise almost as soon as the ink was dry on the President’s signature.

1.  Grandfathering Rules

The ACA contained grandfathering provisions designed to let employer plans avoid compliance with some of the requirements of the ACA. However, the regulations defining which plans could be “grandfathered” permitted only minor changes in healthcare plans. If a plan made any significant changes in deductibles, coverage, or other provisions, the plan could not be grandfathered.

The grandfathering rules essentially forced plans to choose between cost containment and avoiding the ACA requirements. Moreover, according to William M. Freedman of Dinsmore & Shohl LLP on the Association of Corporate Counsel website, fully insured plans wouldn’t even have the choice, because major insurers had decided not to sponsor two sets of plans – grandfathered and non-grandfathered.

Even for self-insured plans, the costs of attempting to maintain their grandfathered status are likely to be too great.  In fact, just a few months after passage of the ACA, the Administration predicted that there would be few grandfathered plans left standing by 2014, when the major provisions of Obamacare kick in:

 “[T]he Departments’ mid-range estimate is that 66 percent of small employer plans and 45 percent of large employer plans will relinquish their grandfather status by the end of 2013. The low-end estimates are for 49 percent and 34 percent of small and large employer plans, respectively, to have relinquished grandfather status, and the high-end estimates are 80 percent and 64 percent, respectively. Federal Register, June 17, 2010, page 34552.

So much for keeping the plan you liked.

2.  “Essential” Health Benefits, Even When They Conflict with Employer Values

HHS sealIf a plan isn’t grandfathered, it must change to meet the ACA requirements. The Department of Health & Human Services has now begun defining the “essential health benefits” that must be covered under the ACA. Most preventive care is now required under every employer health care plan, and must be provided free to participants. While there are good reasons to believe that preventive healthcare in the long run saves money, these requirements do not serve every employer’s workforce, and at least in the short term, they drive up costs.

As the non-partisan Institute of Medicine noted in its recommendations to HHS, “If cost is not taken into account, the [essential health benefits] package becomes increasingly expensive, and individuals and small businesses will find it increasingly unaffordable. If this occurs, the principal reason for the ACA—enabling people to purchase health insurance and thus covering more of the population—will not be met.”

We’ve all heard about the conflict last summer over the overly narrow religious exemption from the requirement that birth control and abortifacients be covered as preventative care for women. Last week HHS issued yet another attempt at a compromise, which might meet the objections of non-profit employers, but does nothing to satisfy businesses whose owners have similar beliefs.

Birth control is not the only subject that has ethical implications. Blood transfusions are another category, as one case in Kansas demonstrated.   Many Christian Scientists do not take medicine or get preventive or other forms of medical treatment.

The point is that under the ACA, employers are not permitted discretion to design benefit plans that they subsidize in ways that do not contradict their moral principles. Once again, if you liked the health plan you had before ACA, you won’t be able to keep it.

3.  Mandatory Subsidies, But Not Too Much

In 2014, all employers with more than 50 employees will be required to provide subsidized health insurance to their employees. The law requires these employers to pay at least 60% of the covered health care expenses of a typical population, and it requires that employees cannot be required to pay any more than 9.5% of their family’s income for the employee’s coverage. Otherwise, the employer owes a penalty for not offering affordable coverage.

But if the subsidy is too large, the plans will ultimately be “Cadillac plans.” A Cadillac plan is any plan that costs more than $10,200 a year for single coverage and $27,500 for family coverage (adjusted for inflation), including both employee and employer contributions to flexible spending and health savings accounts. Beginning in 2018 employers will pay a 40% tax on premiums for such plans.

I seriously doubt that there will be many plans that can provide all the coverage mandated under the ACA, while not charging employees more than 9.5% of their pay for the plan, while not providing too great a subsidy so that the plan is a “Cadillac.” Towers Watson predicts that more than 60% of large employers’ current health plans will be subject to the tax, unless the plans are changed.

Keep the plan you like? Not if it costs too little. Or too much.

* * *

With every issuance of new regulations it becomes more and more evident that the Obama Administration is doing everything possible to fit employer benefit plans into a “one-size-fits-all.” When, in fact, this size may not fit a particular employer or its employees. It certainly does not agree with the originally expressed view that “if you like your health care plan, you can keep it.”

More and more employers will opt not to provide any healthcare at all. They will either keep their workforces under 50 employees (see here for an interesting concept that is likely to grow), or they will choose to pay the penalty as cheaper than administering a healthcare plan that doesn’t suit anyone.

Ultimately, we will all be on government-run plans. Which might have been the intent all along.

How do you see employer healthcare plans changing in response to the ACA?


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Employers, Be Strategic In Implementing Health Care Reform

The Affordable Care  Act (ACA) is here to stay, commentators all agree. There might be some adjustments at the margin – possibly Congress will eliminate the medical device tax; maybe Congress will permit Flexible Spending Accounts and Health Savings Accounts to be used for over the counter drugs.  But the essentials of the ACA will remain, including the individual and employer mandates.

The purpose of this post is not to detail the many compliance issues that employers must satisfy under the ACA. Suffice it to say that employers of all sizes need to be aware of their obligations in 2013, and the even greater obligations facing them in 2014, when the major provisions of the act become effective. Employers should consult their legal counsel, brokers, and other benefit plan experts to determine what they must do to comply with the ACA.

Instead, this post is intended to provoke employers to think strategically about how they want to structure their health insurance plans for employees.  I recently participated in an Aon Hewitt conference call in which their healthcare experts advised that compliance and corporate strategy are two different things, and employers need to focus on both.

Many corporate leaders deplore the need to be experts in health insurance and plan design issues, because it detracts from their focus on their companies’ products and services to customers. Nevertheless, most executives recognize how important the health and engagement of their workforce is. As they implement the ACA, companies will become more involved in healthcare decisions, not less. Wise employers will deal with the problem strategically.

HR, Finance, and other executives at companies of all sizes should discuss:

  • Do we want to build unique health insurance plans designed specifically for our workforce? What are the major healthcare needs of our employees? What employee behaviors are driving our healthcare costs, and how can we incent healthier behavior?
  • Do we want to build or join a private healthcare exchange to provide our employees with more  choices? Would we rather push employees into state or federal healthcare exchanges to reduce our involvement in structuring healthcare plans?
  • Should we structure our jobs to maximize the number of part-time employees for whom we do not need to provide health insurance? What will the implications be for employee satisfaction and for our operational efficiency?
  • How do we segment our health insurance offerings and our communications for various groups within our workforce?

Now that the ACA has survived the Supreme Court and the electoral process, employers must focus on their roles in its implementation. But they shouldn’t ignore their companies’ strategic needs as they do.

Complying with the ACA is one thing. Making the right strategic decisions for your workforce is another. Be sure you do both.


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More Perspectives on Health Care Reform

Last week we heard the Supreme Court’s decision on the Affordable Care Act (ACA). I admit to being one of the more than 800,000 people following the SCOTUSblog live coverage of the justices reading their opinions and the follow-up commentary by politicians and pundits.  SCOTUSblog did a phenomenal job of posting accurate information in real time, and I highly recommend this site to anyone interested in the Supreme Court.

In April 2012, right after the arguments before the Supreme Court in the ACA case, I posted on my many perspectives on health care reform – attorney, former benefit plan administrator, corporate executive, consumer, and conservative. All those perspectives came into play again this week as I followed the coverage of the Supreme Court decision.

1. Limits on the Commerce Clause; No Limits on Taxes – Does the “Tax” Label Matter?

In my earlier post, I said that as a conservative I wanted the Commerce Clause to be limited.  Well, five justices of the Supreme Court limited it.  But the ACA survives anyway under the taxing power of Congress.

I always believed that Congress could have passed health care reform using its taxing power, but in 2009-2010 the President Obama and the Democrats in Congress specifically said the ACA’s penalty for not purchasing health insurance was not a tax.  Turns out it was.

This weekend, I argued with supporters of the ACA whether this mischaracterization of the penalty as “not a tax” matters. The President’s supporters claim that, because both the House and Senate properly passed the statute and the President duly signed it into law, it doesn’t matter what label was put on the penalty. But I firmly believe – as do other conservatives I have talked to – that some Democrats who voted for the ACA would not have done so if the penalty had been labeled a tax. In my opinion, labels do matter, because they impact the political process.

2. Uniform Benefit Plan Laws Unlikely

I said in my April post that as a benefit plan administrator, I believe uniform national laws are a huge simplifier for multi-state employers. Although the ACA is a national law, the Supreme Court decision does nothing to help businesses with simplicity.

I have listened to what benefit plan consultants like Aon Hewitt  and Towers Watson are telling their clients about compliance with the ACA. They say that, although the Supreme Court’s decision does mean that employers need to move forward with compliance, the devil will be in the regulatory details.  This 2,700 page act has already spawned more than 12,000 pages of regulations, and reams more regulations will be published before we really know what the law entails.

And different states and different employers will choose different paths to compliance.  Some states will expand Medicaid, others will not.  Some will develop their own healthcare exchanges, others will not.

Some employers will continue to offer group healthcare insurance, others will work with healthcare exchanges in states that adopt the exchanges, and some employers will decide that paying penalties is less costly than providing insurance to their employees. Also, some employers may decide to re-structure their workforces to reduce the number of full-time employees who must be covered.

Change in the employee benefit arena will continue for many years to come, and plan administrators will be dealing with the upheaval for at least a decade.

3. Equitable Taxation of Health Care Expenditures and De-Linking Health Care from Employment

The Supreme Court decision, of course, did nothing to fix the inequities between employer-provided healthcare insurance (premiums paid with pre-tax dollars, and employer contributions not taxed) and individual healthcare insurance (all costs paid with after-tax dollars).  I remain of the opinion that healthcare insurance should be totally separated from employment, and there is no movement in that direction. But at the very least, the tax treatment of employer-provided and individually purchased insurance should be the same.

Republicans have said their version of healthcare reform — after Obamacare is repealed — would equalize tax treatment of healthcare insurance.  Whether they will get the opportunity to repeal the ACA and pass  their own legislation won’t be determined until after the November election.

4. Tax Increases Coming; Premium Increases Also Likely

As a result of the ACA, higher income taxpayers face additional taxes, quite apart from the debate over whether the Bush tax rate decreases should be extended.

The Medicare tax on salary and self-employment earnings on individuals making more than $200,000 and couples making more than $250,000 in salary and/or self-employment income will pay an extra .9% above the 1.45% we all pay now.

In addition, starting in 2013, individuals making more than $200,000 in adjusted gross income and couples making more than $250,000 will be hit with an additional 3.8% “Medicare contribution tax.”

Furthermore, everyone’s flexible spending account deductions for healthcare expenditures will be limited to $2,500 per year, limiting a very popular tax shield.

As a result of these changes, expect a flurry of tax-planning activity before January 1, 2013, arrives.

In addition to these tax increases, it is still likely that health care expenses in the form of premiums and medical products and services will consume an ever greater percentage of family and government budgets. Contrary to President Obama’s promise, the ACA does not adequately bend the cost curve. In my opinion, individuals will need to take more responsibility for their life choices and health care decisions before health care costs can be controlled.

5. It’s Still Not Over 

Many more lawsuits will be fought before we know the full ramifications of the ACA — already litigation is pending over religious exemptions from contraceptives. Other mandated benefit issues will arise, as will disputes over eligibility for subsidies, state and federal arguments over Medicaid, what providers of medical services and devices should be paid, and a host of other issues.

And I still believe, as I did in April when I wrote my earlier post, that there will be amendments to the ACA before it goes into effect, or when the consequences of the act become too onerous.  The 2,700 pages enacted in March 2010 will not remain inviolate, no matter what happens in the November election.

What do you think? 

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My Varied Perspectives on Health Care Reform

This past week’s Supreme Court arguments over the Affordable Care Act fascinated me – as an attorney, as a conservative, as a former benefitplan administrator, and as a corporate executive.

1.      Limits on the Commerce Clause
As an attorney, I was fascinated by the discussion on the limits of the Commerce Clause. In two years, we’ve moved from Nancy Pelosi asking “Are you kidding me?” when a reporter questioned whether the ACA was constitutional to a very serious debate in the Supreme Court over whether the federal government can require its citizens to purchase a product from private insurers.

As a conservative, I want to limit the intrusion of government – particularly the federal government – in the lives of Americans. The Constitution enumerates certain powers for the federal government, and reserves all other powers for the states or for individuals. Where are the limits of the Commerce Clause? We should find out something in June.

2.      The Desirability of Uniform Benefit Plans

However, much as I would prefer to see limits on what the government requires of its citizens, as a former administrator of health and pension plans for a corporation with employees in all fifty states, I recognize that uniformity makes plan administration much simpler.

Using the states as a testing lab for different healthcare reform options – as Republicans have been arguing – complicates plan administration significantly. The Employee Retirement and Income Security Act (ERISA) has a strong preemption clause, which permits companies that self-insure to develop national benefit programs. As a plan administrator, I appreciated ERISA’s preemption clause.

By contrast, companies that have a fully insured product must meet a variety of state mandates and other insurance regulations. Most businesses that have fully insured health plans have very little ability to opt out of state requirements they don’t like or think are too expensive, such as infertility treatments or organ transplants.

One thing to watch as the Department of Health & Human Services issues regulations under ACA is how onerous the requirements will be on all health insurance plans. We’ve seen one situation recently – the inclusion of birth control and abortificants as mandated preventative health care for women. The more treatments that are mandated under ACA, the more expensive health care insurance will be for all of us.

Uniformity is nice, but so is the ability to choose a plan that makes the most sense for the individual.

3.     De-Linking Health Care from Employment

As a conservative and a benefit plan administrator, I would prefer that health insurance not be associated with employment. Obviously, that would have eliminated the Benefits Department where I worked for a portion of my career, but it would have permitted my company to focus its attention more on the needs of the business and less on the rising cost of employee benefits. When the CFOs of companies spend as much time on tweaking their employee health care plans as on financing product and equipment improvements, something is wrong.

On the other hand, I recognize that a major reason that the health care system works today is that employers subsidize their workers’ health insurance. Employers get away with offering the same price to everyone – one of the requirements the ACA attempts to impose – because they subsidize the cost.

Younger employees are willing to buy into employee health insurance plans because of the subsidy which makes it worth their while (and, of course, older employees get an even better deal). In smaller businesses and non-profit employers, which cannot subsidize their employees’ costs to the same extent that large businesses can, employees are less likely to buy into insurance at work. They get coverage through a spouse’s employer or they do without health insurance.

4.     It’s Not Over till It’s Over

So what will the Supreme Court do? What will Congress do after the Supreme Court decision, whichever way it lands?

No matter what, there have been too many questions raised about the Affordable Care Act in the last two years. The 2,700 pages enacted in March 2010 will not remain intact.

What are your predictions?


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