Posted 08.01.2010

The Healing Game

Health-care reform spells murky times ahead

By Debra Melani

If you can muddle through the rhetoric and set aside a rash of crystal-ball predictions surrounding health-care reform, you can find one thing that's clear about the landmark legislation: very little. The massive bill has brokers, lawyers and health-care administrators scratching their heads, as business owners wait idly by.

The best advice for employers: Don't fall asleep.

As unclear as a number of the pending policies and mandates are, with clarifying regulations on a slow drip out of the nation's capital, a few are set to take effect in September. That means many businesses will see (or are already seeing) new requirements at the insurance renewal table this fall, along with those nearly ever-present rate hikes.
One general consensus: Employers should retain a good accountant and health consultant to help them through the mire of tax implications and compliance issues that lie ahead. "Otherwise, you're going to wake up next year and find you are not compliant, and you have a huge rate increase," said Steve Roper, president of Roper Insurance and Financial Services.

Bracing for hikes

Set with a broker she trusts, Lynn Leader, president of Alumni Consulting Group, said she expected to see changes by September. Her employees will be some of the first under the new mandates. "It's coming, and it is what it is. We have to deal with it," said Leader, whose biggest worry is cost and how her IT consulting company will absorb it. "I'm expecting a pretty hefty increase."

Although Leader's concern is nothing new - Colorado employers routinely face double-digit increases - some brokers predict, at least for businesses initially, the Patient Protection and Affordable Care Act will not seem so affordable.

"Premiums are going to go up, and they are going to continue to go up," said Ed Regalado, of HUB International Insurance Services. Businesses should also brace for a big rise in administrative costs, he said. State premium projections are not yet released, but industry experts expect a 10 percent to 15 percent average increase for 2011.

"We've seen it all over the board," Roper said, with some companies reporting as high as 60 percent and others as low as 8 percent." Price gouging is a concern, as some carriers will try to take advantage of the new laws and push the margin, Roper said. "But they are playing Russian roulette with the government."

This spring's Anthem debacle, with President Obama's public flogging of the company for proposing as high as 39-percent rate increases in California, serves as a red flag for any carriers considering large rate boosts, he said.

And carriers beware: The state's guns are also loaded. "I'm ordering my staff, responsible for reviewing rates, to look at everything very carefully," said Insurance Commissioner Marcy Morrison. She added that Colorado has extra "tools in its toolbox," thanks to House Bill 1389, which gives her more leverage than other commissioners to deny premium hikes. Also, the state has applied for a five-year, $5-million grant to enhance its rate-review program.

Acknowledging that initial rate hikes are expected, Lorez Meinhold, the governor's director of health reform, asks businesses to remember the whole picture as they begin navigating the new law. At-risk pools, mandates, and the upcoming exchanges are created to drive costs down and spread risk across larger pools.

"It will reduce costs and ideally enhance competition. That's what this reform is about." With the experience of its Blue Ribbon Commission for Health Care Reform, Colorado is a step ahead of many states, which should ease some of the changes, Meinhold said. "But we need everybody playing."

Keeping a plan

Businesses wanting to delay "playing" for a little while can look at grandfather status. Prompted by Obama's campaign vow that those who like their insurance can keep it, the provision allows employers to defer certain benefit mandates, said Leo Tokar, senior vice president of Lockton Cos. But keeping health plans a company had before the bill was signed on March 23 includes restrictions to benefits changes and cost sharing, he said. So the question is: "Is the juice worth the squeeze?" So far, most employers are finding the answer is no, Tokar said.

• Page 1
• Page 2
• Page 3