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Feb 21, 201309:29 AMOpen for Business

with Jody Glynn Patrick

The Affordable Care Act: Quick answers from IB

The Affordable Care Act: Quick answers from IB

(page 1 of 2)

Your next issue of IB will feature a test tube of blood on it, signifying that we convened a health care roundtable panel, though the tube also could be likened to our separating out how much blood the new Affordable Care Act is going to cost employers and employees alike. The advice our experts gave, which I won’t repeat here in total, started with the suggestion to stop denying that this is happening or that it will affect you; both are true.

Toward the goal of better understanding the mandates and timetable, here’s a quick synopsis of what will happen in 2014, when the act takes effect:

  1. In 2014, every man, woman, and child will be required to have health insurance. All taxpayers will be required to show proof of health insurance when paying their taxes or pay a penalty. The penalty is $95 or 1% of taxable income (whichever is greater) in 2014, $325 or 2% of taxable income in 2015, and $695 or 2.5% of taxable income in 2016 and beyond. Experts are predicting that young, healthy employees will opt for the penalty or wait until they get sick to sign up for insurance – and given that there will no longer be exclusions for pre-existing conditions, that should be possible. However, without their $$ in the pool, the cost of premiums will skyrocket as the sickest among us buy insurance that they perhaps were, before 2014, denied.
  1. All employers with more than 50 employees will be required to provide health insurance or pay a penalty if at least one employee joins an exchange and receives a subsidy (and remember, everyone is required to have health insurance, so they will join the exchanges). The penalty is $2,000 per full-time employee minus 30. So if you had 100 employees, you’d pay the penalty on 70, times $2,000 each. Is that cheaper than providing the premium? That question may very well be answered in a courtroom; do you want to be the defendant in such a suit? Our experts advise keeping your current policy in the short term.
  1. Employees will have the choice of purchasing health insurance at work, with whatever contributions the employer chooses to make – or buying it on an exchange. Gov. Scott Walker decided not to establish a state exchange, so workers here would be buying it on the federal exchange, and in that event, there would be federal subsidies (versus employer contributions) to offset some of the cost of premiums.

Experts in health care are discussing the fallout to the larger pool if business owners decide to pay the penalty until forced to comply (until the pain outweighs the gain), but I think business owners will be having another, perhaps more important conversation with key managers. You know those job numbers the governor promised? The economic recovery the president promised – the one that relies heavily on job creation? What is the incentive now to create that 51st job? I think you’ll see companies split off divisions, which will become separate LLCs once they hit a certain number of employees. (Continued)

Old to new | New to old
Feb 21, 2013 01:53 pm
 Posted by  Anonymous

I think you will find that unless those choosing to be uninsured until they get sick happen to get sick during an open enrollment period, they will be unable to purchase insurance until the next open enrollment period. Insurance companies will not be inclined or required to sign up anyone except during open enrollment periods or upon disclosure of a qualifying event, such as coming off of a parent's plan, or exiting the military. So the person, who waits to become ill had better time the illness right or risk paying for care without the benefit of insurance until the next enrollment period.

Feb 21, 2013 03:32 pm
 Posted by  Anonymous

Some of the things no one talks about (because lobbyists on the left and right are not interested) but the business community should be aware of are:

1)Walker's changes to Medicaid reduce the upper end of the eligibility scale- this will probably toss a higher percentage of low income families off Badgercare in higher cost of living areas like tDane County(and Milwaukee) than the rest of the state. As high as they are we actually have lower insurance rates than the rest of the state- we may see an extra boost as Medicaid recipients lose coverage and end up on charity care whose cost is transferred to the rest of us in higher premiums.

2) The most interesting part of the Affordable Care Act and usually ignored (and which needs an advocate) are the efforts to reduce medical errors and increase quality. Some of this is being done through the UW , some of it is based on interesting mixing of industrial enrgineering and Quality Improvement processes with medicine. Had lunch a few weekends ago with a geriatrician working in Rhode Island- using some simple processes (involving high tech tools like pencils and paper) they reduced emnergency room visits, unneeded follow up visits, etc, 30%

Errors by the way are not tied to income or age. I use a CPAP machine- several years ago my health care provider bid out their contract on the machines and maintenance- changed over all of us. The worker at the company forget a simple piece from my machine - end result was a year of breathing C02 instead of oxygen. In your 50's it is hard to prove damages from that but it could cause early dementia and lots of costs 10 years out- that simple error could be several hundred thousands of additional care - and no one knows how many of the machines were assembled locally without that part.

So I would like to see some coverage that goes beyond the obvious oft repeated slogans and also acknowledges that our health runs on different principles than the rest of our economy

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