It was just last March when the Patient Protection and Affordable Care Act was signed into law. Now, one year later, the one thing that seems to be most certain ... is that nothing is certain at all.
Mini-med plans, once thought to be headed for extinction due to the minimum loss ratio requirements, have been granted an exemption. Nondiscrimination rules for insured plans were deferred at the 11th hour (Christmas Eve, to be exact) - unfortunately long after many employers had already made "to grandfather or not to grandfather" decisions that would determine whether those rules would apply.
And we're all still waiting to learn when those auto-enrollment requirements will kick in.
Meanwhile, in a largely symbolic move, the House has approved legislation to repeal PPACA, the "Repealing the Job-Killing Health Care Law Act," for which there is no acronym that could possibly be pronounced. While this legislation failed to achieve its stated purpose, other congressional action will target funding for certain key features of PPACA. But the real action is likely to be in the courts, where legal challenges are marching inexorably toward a date with the Supreme Court. That, at least, does seem to be certain.
So if your crystal ball seems to be a bit cloudy these days, it's for good reason.
With uncertainty in abundance, it's understandable that a "wait-and-see" attitude could take hold. While it would not make sense to completely overhaul benefit plans now to comply with provisions that might be significantly altered, it would also not be prudent to close our eyes and expect PPACA to simply go away.
One of the key issues at the heart of PPACA is the affordability of health care, which is not a new issue for employers or employees. The results of Mercer's 2010 "National Survey of Employer-Sponsored Health Plans" showed that costs increased 6.9% in 2010, the largest increase since 2004 - and for the 12th consecutive year, much more than the increases in wages or CPI. Increases of this magnitude will put more and more plans at risk of triggering the 40% excise tax scheduled to apply in 2018. Projections based on data compiled in Mercer's survey suggest that 39% of employers have plans that will trigger the excise tax in 2018.
The excise tax notwithstanding, most employers will find that annual increases of around 6% are not sustainable. Since the "shared responsibility" set to apply in 2014 will limit the ability of employers to shift much of the costs to employees through plan design or premium cost-sharing, we should continue to see an increase in efforts to manage costs through various forms of health management.
For two consecutive years, employers with more intensive health management programs have reported annual cost increases that average two percentage points lower than employers offering limited or no health management programs. Because of the potential in these programs to have a measurable, positive impact on cost, more and more employers are actually making financial investments in them, in the form of incentives offered to employees. Twenty-seven percent of large employers now offer such incentives, a big increase from the 21% that did so the previous year.
In addition to implementing broad-based health management programs, employers should be doing some careful analysis of their populations to determine how the eligibility and affordability provisions of 2014 will apply to them. Employers with significant numbers of part-time and/or low-paid employees could face substantial increases in cost by adding employees to their plans or increasing their premium subsidies.
The first year in the life of PPACA has been an interesting one, to be sure. One other thing we do know with some degree of certainty: The next couple of years will bring more of the same. So buckle up - it's going to be an interesting ride.
Lane is a principal in Mercer's Health and Benefits business. Esfahani is a senior associate in Mercer's Health and Benefits Regulatory Resources Group. Both are located in Washington, D.C.
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