Navigating The Post-ACA Wonderland
The new year has arrived and employers now find themselves on the other side of a looking glass facing the surreal world of healthcare reform and a confusion of regulations.
Many HR professionals delayed strategic planning for reform until there was absolute certainty arising out of the SCOTUS constitutionality ruling and the subsequent 2012 Presidential election. They are now waking up in “ACA Wonderland” with little time remaining to react to the changes being imposed.
A handful of proactive employers have begun, in earnest, to conduct reform risk assessments and financial modeling to understand the impacts and opportunities presented by reform. Others remain confused on which direction to take.
If reform is indeed a 1,000-mile journey, many remain at the bottom of the rabbit hole – wondering whether 2013 will mark the beginning of the end for employer sponsored healthcare or the dawning of an era of meaningful market-based reform in the United States.
For many, the future is less certain and for a few doomsayers, the ACA is the final chapter in a narrative about a world of entitlements gone mad. Like Alice, benefits decision makers are asking, “Which way should we go?” The decisions one makes for 2013 will have an impact on costs and plan participation in 2014. It’s time to get moving but you’ll need some advice to safely cross Wonderland:
1. Think like a risk manager. Any risk management professional has been trained to first review risks, evaluate risk drivers, eliminate or mitigate the identified risks and find the most advantageous way to finance the risks. Equipped with payroll, coverage and actuarial plan value estimates, any employer can quickly determine what, if any, penalties they may face associated with offering unaffordable or inadequate benefits to eligible employees.
2. Strategy first, structure second. Planning forreform means understanding where you want to go. Do you believe providing healthcare is an essential part of the social contract between you and your employees? Are higher per capita healthcare costs requiring you to think differently about providing compensation, benefits and retirement?
3. The reform roadmap requires you to either “play” or “pay.”Most firms over 100 employees generally offer medical coverage that meets or exceeds ACA coverage and affordability requirements for the majority of their employees. They have little exposure to penalties. However, these same firms are considering how reform may change the way they think about financing and offering medical benefits. Don’t feel guilty about reviewing pay or play scenarios – Reform gives any employer a rare opportunity to reexamine their employee benefits strategy.
4. Wellness is vital for any employer who desires to continue to offer sponsored plans. ACA offers expanded wellness incentives to employers.
5. Understand public exchange benefits. private insurers participating in heavily regulated public exchanges will be under intense political pressure to keep costs down. To the degree an employer is actively pushing employees toward a public exchange, the employer must understand that cost and coverage will not mirror private plans.
6. Defined contribution plans are a way to redistribute costs, not a path to improved affordability. If you do entertain the notion of migrating to a more defined contribution approach for employees, be certain to understand your options. DC is a cost shifting strategy.
7. Self-insurance is 20/20 vision. Health reform includes assessments that stakeholders will pass on to commercially insured and self-funded plans. Self-insurance remains the most efficient method of financing healthcare – provided an employer understands its risk tolerance. Self-insurance, if structured correctly, can limit financial risk while maximizing transparency.
Michael Turpin served as the northeast regional CEO for United Healthcare and Oxford Health from 2005-2008 He is currently executive vice president for benefits for USI insurance Services.
