Nearly seven months after the Patient Protection and Affordable Care Act (PPACA) was passed into law, most businesses haven’t come much closer to understanding how health care reform will impact their costs.
“With an estimated 35 million additional people becoming eligible for services in an already overextended health delivery system, it’s not logical to think that costs will decrease,” says Robert DiCosola, executive vice president of human resources/training and development, Old Second National Bank, Aurora, Ill.
DiCosola says that employers can expect to carry a heavier cost burden in order to provide health insurance to employees.
“The good news is that all employers are in the same boat of uncertainty,” DiCosola says. “Employers will have to closely monitor what their competition is as the health care legislation unwinds.”
Smart Business spoke with DiCosola about strategies businesses can begin to implement now to combat rising costs.
How can employers begin to prepare now for the upcoming changes?
There are three critically important considerations. First, human resources practitioners and business owners don’t have to be experts on this behemoth. However, they do need to stay close to the experts. Solicit, rely on and act upon the consultation and advice of your insurance brokers and other providers.
Second, make sure your employees and senior management know you are on top of the reform issue by communicating via the intranet, information sessions and the company newsletter. Share the timeline of critical PPACA mileposts with senior management and let them know how you have the organization in compliance.
Finally, don’t panic. There is still time to make sure that your organization is in compliance with each critical incident milepost. And parts of this legislation could look very different by 2014, when major parts of the reform plan become effective.
What are some strategies to alleviate the burden of rising health care costs?
For years, employers with fully insured plans could consider a number of options in an attempt to keep health care expenses from going through the roof, including raising deductibles, co-pays or other employee out-of-pocket expenses; putting the health care insurance contract out to bid; and restructuring the drug delivery system to steer employees toward less expensive generic drugs.
The PPACA could dilute these options for employers who ‘grandfather’ their health care plan from certain new mandates. If an employer grandfathers its health insurance plan, the plan is exempt from certain mandates, such as limiting employee cost-sharing for things including out-of-network emergency room visits and preventive-care procedures.
However, grandfathering could come with costs that make offering the plan unsustainable. An employer can make only minimal increases to employees’ cost-sharing provisions, such as deductible limits and out-of-pocket maximums, and zero increases to employee coinsurance percentages. Such restrictions could result in employers rethinking the cost benefit of offering insurance.
