Now that Health Care Reform has Passed, What’s Next for Employers”

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10:47 PM Sunday March 21st, 2010 Health Care Reform Passed the House with a Vote of 219 to 212.  About 10 minutes later the “fixes” to the Senate bill pass by one vote more. As Yahoo News Blog “House Passes Second Historic Healthcare Vote”  says:

“While the senate still has to weigh in on an amended bill, most observers think that shouldn’t be much more than a formality especially at this late stage of the process. At the very least, the House vote ensure that there will be a health care bill on President Obama’s desk, perhaps as early as the end of this week.  And the president’s signature will set I motion the most dramatic change to American health care since Lyndon Johnson signed Medicare into law in 1965.

The bill, which the Congressional Budget Office says will cost $940 billion over the 10 years, is expected to cover 32 million Americans who are presently uninsured”

Now what?  We asked Grahall’s Robert Cirkiel what’s next for employers.  Here are Robert’s recommendations.

“Employers need to take a hard look at their health care plans and begin to consider how’d they’d be best positioned.  We’ve written on this subject to a point but the key decision will be (I) whether to “pay or play” (ii) whether to offer high cost plans, or (iii) whether to try to ‘beat the system’. 
 
“The ‘pay or play’ route will take a number of employers out of the health benefits business altogether. In this approach, employers will provide employees money to buy their own insurance from the ‘Exchange’.  Along with this, employers will pay a penalty for lower paid employees that will get income related Federal subsidies.  All employers that currently offer health insurance should look at this approach and determine whether it makes economic sense for them.  Other than HR departments (whose own jobs will be at risk) don’t be surprised if senior management does not miss offering health benefits one bit. 
 
“High cost plans are going to be on the outs way before the 2018 enactment date for the ‘Cadillac Tax’.  The government has given employers their cover for getting rid of them.  Technically, the tax is on the insurers not the employers, but the result is the same. 
 
“As a corollary the ‘pay or play’ decision, employers will look to see if they can provide coverage for less than the Exchange.  The Exchange will be offering insurance, after all, and insurance premiums are an average, meaning roughly half overpay and half underpay.  Those who would overpay in the Exchange will choose to go their own way.  Employers will determine whether their costs make them a ‘winner or a loser’ compared to the mean, and buy accordingly.

“I will avoid any political discussions and analysis here except for this; now that it is passed, Health Reform will neither be as bad nor as good as its detractors and supporters predict.”

Contact Robert Cirkiel at Robert.cirkiel@grahall.com

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