The year in employer-based healthcare: ACA uncertainty and cost-stemming efforts
With President-elect Donald Trump now filling his cabinet with men focused on elimination and possible replacement of the Affordable Care Act, it’s no surprise the top EBA story of the year in healthcare was the ACA and its future in a new political landscape. Almost immediately following his win, the fate of the insurance law that gave coverage to an extra 20 million uninsured Americans became uncertain.
On the campaign, candidate Trump called Obamacare a failed plan and a disaster, and many benefit advisers shared that view. Immediately following his victory, President-elect Trump revealed that his health plan would likely continue hallmarks of the ACA, such as the pre-existing condition rule as well as the provision allowing parents to keep their 26 year-old children on their health plans, but details have yet to be released.
Still, industry experts agreed that one of the first elements of the ACA to go would be the Cadillac tax. The employer mandate was a top concern for employers in a survey that was taken immediately after the election. According to Aon, which conducted the survey one week after the election, the reason was uncertainty. “The employer mandate, which has the reporting obligations, the disclosure obligations, 1094 and 1095 forms and the service tracking ... all of that goes into the ACA. The concern is, is it going to be dropped, expanded or modified in some way?” said an Aon representative.
Also see: “Biggest people moves of 2016.”
When it comes to the new administration’s healthcare team, Trump has chosen U.S. Representative Tom Price (R-Ga.) to head the Department of Health and Human Services. A physician and outspoken critic of the ACA, Price has previously introduced legislation to replace President Obama’s health insurance law.
Critics of the ACA seemed to be hearted by Price’s nomination. “I think [it] shows a seriousness [about] at least repealing key parts of the ACA. No. 1 on the list to go first I think is the Cadillac tax,” says Brian Marcotte, president and CEO of The National Business Group on Health.
Marcotte adds, “I also think the employer and individual mandates would also be on the docket, as well as the federal subsidies. There’s a lot that’s unclear [about] how that would be done, but there is a seriousness here with [Trump] appointing Price.”
According to Craig Hasday, president of Frenkel Benefits, the politically divisive ACA would have to be replaced by a plan that pleased both sides of the political aisle. “I would give the Democrats an ‘A’ for effort, but a failing grade in executing President Obama’s signature legislation. And to a large part, I attribute this to partisanship arrogance. The party of ‘hope and change’ didn’t stay focused on what has worked to make our country great: the democratic process,” he says.
Cost concerns on the ballot
In other 2016 healthcare news that could have an impact on the coming year, the rising cost of prescription drugs remains a top concern. This year, it even reached the ballot box. A proposition to regulate drug costs failed on the California ballot in November, but a similar plan could pass or fail in Ohio next year.
Voters in California decided that drug prices should not be regulated so that state agencies would pay the same prescription costs that the U.S. Department of Veterans Affairs pays for its prescriptions. Despite this defeat, Ohio voters will decide a similar piece of legislation on the ballot next year, which is virtually identical to California’s prop 61.
Consumer-driven healthcare: Exchanges and telemedicine
The emerging private health insurance exchange market continued to emerge this year as large-scale employers took a wait-and-see approach to this healthcare delivery option. This was not the case with small to mid-size companies that saw the benefits of technology platforms that aim to simplify shopping for coverage, administering plans, costs controls and achieving improved results. Since the private exchange market now numbers at least 150 players, “employers are taking a longer time to assess which exchange is right for them,” says Barbara Gniewek, a principal PwC’s healthcare practice.
The caution over private benefit exchanges for workers approaching retirement thawed a bit in 2016 as well. A Willis Towers Watson survey found that 56% of U.S. employers said they were confident that public exchanges will be a viable option for their pre-age 65 retirees who are not yet eligible for Medicare. Employers consider public exchanges to be “relatively stable after a rocky start,” too. “About 25% of large U.S. employers offer pre- and post-age 65 retiree health benefits,” says Willis Towers Watson senior director of policy affairs John Barkett. “This is down from the late 1980s when upwards of two-thirds of employers provided this kind of coverage.”
When it came to new technology, American employers enthusiastically jumped on the telemedicine bandwagon even if their employees did not. Telemedicine services — such as workplace kiosks connected to nurse practitioners — among large employers surged to 59% in 2016 from 30% in 2015, according to Mercer’s National Survey of Employer-Sponsored Health Plans. The survey of 2,544 participants also noted the potential for significant savings when health plan members have a telephonic or video visit to assess non-acute issues. A telemedicine visit averages $40 compared with a traditional office visit that usually costs $125. “Now we have to get people to use the service in order for members and plan sponsors to benefit from the offering,” says a Mercer healthcare reform leader.
When it comes to curbing costs and providing healthcare to workers, onsite clinics delivered in 2016. According to the Employer Measure of Productivity, Absence and Quality Survey from the National Business Group on Health and Truven Health Analytics, 60% of the employers surveyed offered an onsite clinic to some portion of their workforce. Employers offering onsite clinic access to their entire workforce saw an average of less than five workdays missed per employee in 2014 compared to employers without clinics. They reported an employee absence rate in 2014 at more than 20 days per employee.