Tag Archives: Employer

Impact of PPACA (insurers, healthcare providers, employers)

12 Aug

The US Supreme Court ruling upholding the 2010 healthcare law will dramatically transform the US healthcare system.  Components of the law will significantly impact insurers, healthcare providers, and employers.  Here are few ways PPACA will impact or likely impact all 3 elements (insurers, healthcare providers, employers) of the US healthcare system.

Impact on healthcare providers:

  • Doctors are nervous about the new law and how it will affect their incomes, their access to technologies, and professional decision making.
  • Physicians also believe that this law will shift decision-making authority from doctors to government.
  • The Affordable Care Act requires all Americans to purchase health insurance, so doctors need to be prepared for an inflow of patients as 36 million newly insured will be added in the system. Also, considering the current burnout rate and doctors dropping out, there will be tremendous mismatch between demand and supply resulting in shortages of doctors and increase in prices and longer wait period.

Impact on employers:

  • Employers with 50 or more workers are responsible to offer employees health coverage. If they don’t, they may face penalty. So they have started to send their workers to exchanges and if they have earnings low enough to qualify for federal subsidies they can get insurance with extensive coverage at lower rate. Small stores and restaurants are likely to be most affected. There are no responsibilities for small employers with fewer than 50 workers. Also, numbers of employers have been restricting the health benefits they offer to employees, expecting higher costs.
  • In trying to control their own spending, employers often are shifting health costs to employees. So the average annual deductible for an individual has nearly doubled in the past few years. The idea is not just to make workers’ pay more but make employees think more about health related expenses and behavior. Whenever you are shielded from the cost, you tend to spend more. Companies want patients to shop around for the best prices and use healthcare system wisely and effectively.
  • Few employers such as Trader Joe’s, Target and Home Depot, have dropped coverage for part time employees on the grounds that those workers can now find coverage through the insurance exchanges. As a result three things can happen, few may choose to keep the money that the company is contributing say $250 to buy from exchanges and not but any insurance, few may get a better deal at subsidized rate or may be even free and can pocket contribution from the company, whereas few employees may see their premiums go up based on their income.  
  • There have been reports of employers holding back on hiring in order to stay under the 50-employee threshold that triggers health insurance responsibilities. There also have been reports of employers cutting workers’ hours to below 30 per week so that they don’t count as full-time.

Impact on insurers:

  • ACA has made insurance accessible and affordable to millions of people. Those who were already insured but used to pay higher premiums will see their premiums go down and their plans will get more comprehensive. But at the same time, the law will make several million people worse off, by driving their premiums up, pushing them into plans that are less comprehensive.
  • Premiums will rise because plans will have to be more comprehensive with no minimum limits than they used to be.
  • Premium costs will be shifted away from the old and sick and toward the young and healthy.Currently, insurance companies charge people more or less based on gender, health conditions, age, habits, etc. Under the ACA, insurers won’t be able to vary premiums on the basis of these factors. This means lower premiums for old and sick, and higher premiums for people who are young and healthy. 
  • Premiums will rise overall because of the adverse selection i.e. the aging population and the average individual will be sicker than before.To maintain a balance, what insurance companies need is a good mix of healthy and sick population but because of ACA senior citizens, near retirement population, people with preexisting conditions and population that is expensive to insure and treat and those with chronic illness are running to exchanges and utilizing the insurance benefits. This may result in higher premiums for the healthier population who make fewer claims and thereby more dropouts from the insurance plan causing further increase in premiums. Also, though insurance is mandatory, fines are not sufficient to discourage people from not buying insurance. So, many younger and healthier populations chose not to purchase insurance.

 

References

FAQ: How Obamacare Affects Employers And How They’re Responding : NPR. (2013, October 11). Retrieved February 1, 2014, from http://www.npr.org/2013/10/11/231103865/faq-how-obamacare-affects-employers-and-how-they-re-responding

Josh Barro (2013, November 5). Here Are The Five Big Reasons Obamacare Changes Insurance Premiums – Business Insider. Retrieved February 1, 2014, from http://www.businessinsider.com/here-are-the-five-big-reasons-obamacare-changes-insurance-premiums-2013-11

Kimberly Leonard (2013, December 13). 3 Things Doctors Should Know About Obamacare. Retrieved February 1, 2014, from health.usnews.com/health-news/hospital-of-tomorrow/articles/2013/12/13/3-things-doctors-should-know-about-obamacare-how-doctors-can-prepare-for-obamacare

Tevi Troy (n.d.). How The Affordable Care Act Will Affect Doctors | The Health Care Blog. Retrieved February 1, 2014, from http://thehealthcareblog.com/blog/2012/06/15/how-the-affordable-care-act-will-affect-doctors/

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