“Tell me the rules and I can play a winning game.”
So says Jonathan Cohn, CEO of the Kansas City-based property management company Yarco, Inc. That just about sums up the challenge his company faces with the sweeping health-insurance changes that became federal law last month.
Because his company operates in an environment that involves public housing and federal subsidies, Cohn says, “I’m used to the rules not always making sense. So is any experienced business person.” What’s being thrust upon business owners now, though, is an altogether new level of uncertainty with the riddle of a reform package Cohn calls “massive.”
“What does seem clear,” Cohn said, “is that it will, in the short term, increase the costs and burdens of coverage, and those costs will fall on employers, employees and government, all of whom are already over-burdened.”
Yarco, with 500 employees, is not a small business by traditional measurements, but it’s clearly no AT&T, which produced one measure of the reforms’ impact on business this month when it said it would declare a non-cash charge of $1 billion in the first quarter to comply with the new law. Competitor Verizon quickly followed suit, announcing its own $940 million charge-off.
That’s just a start. All across America, business owners and executives are hustling to position themselves for the economic costs and compliance mandates stemming from the insurance reforms—and doing so without having a complete breakdown on the full impact. Longer-term planning becomes an even bigger challenge, given opposition to the reforms that is brewing on several fronts.
The attorney generals of more than a dozen states have taken steps to challenge the new health-care regulations in the courts, a process with an indefinite timetable. That comes even as Republican opposition mounts to the fine-tuning of the legislation that’s still going on in Washington. And opponents have vowed to make the reform package a central issue in November’s elections, where they hope to whittle down Democratic congressional majorities and perhaps even secure enough votes to overturn its key provisions.
But even if that were to happen, the new Congress wouldn’t take its seat until January 2011, and a lot can happen to change the business landscape in nine months.
“We have to make plans,” Cohn said. “Until the radar makes clear whether any additional change is coming, we have chosen to act on what we know now.”
That means teaming with its insurance planning partner, the Lockton Companies, to define a strategy for incorporating the changes. Lockton, competing brokerages like Willis of Greater Kansas and insurance underwriting figures ranging from heavyweights like Blue Cross and Blue Shield to regional organizations like Holmes Murphy & Associates, have been scrambling to produce advisories for their business clients.
A national association, Blue Cross isn’t digging in its heels and hoping for something better to come down the legislative pike. Providing health insurance for nearly 1 in 3 Americans, it has chosen instead to find ways to make this legislation work. That’s because the nation’s previous insurance model clearly had shown that it wasn’t as effective as it needed to be, said CEO Tom Bowser of Blue Cross Blue Shield of Kansas City.
“There’s been a protracted national debate for over a year on health-care reform and health-insurance reform,” Bowser said, and the time has come to work through the complexity of the new laws to make them work as intended.
“The path of prudence is to prepare for the known, and not count on the unknown,” Bowser said. “I do expect debate to continue to go on for a long time.” Nonetheless, he said, “It’s not a choice for us as an insurance company subject to state and federal regulations; our choice has to be on implementing this, and in a way specified by Congress.”
Holmes Murphy, as well, is telling clients that this is not the beginning of the end for employer-paid health coverage, but “the end of the beginning” on the debate over how to best balance the issues of accessibility and affordability.
All of those companies have added health-insurance advisory pages to their Web sites, and are doing other outreach to keep business clients, and individuals, apprised of coming changes.
In general, businesses are being counseled to consider the timeline for changes. Various elements of the new law kick in immediately; others won’t be in place until 2018. All along the way, business owners should anticipate effects on their operations, insurance professionals say. They are also being informed about potential penalties, qualifications for subsidies, exceptions and more.
Public officials, as well, are reaching out.
“We are working feverishly to compile information,” said Sandy Praeger, insurance commissioner in Kansas Her peer commissioners, she said, will quickly identify potential problems with implementation and of the law and will propose solutions. “That,” she said, “will surely help avoid many unintended consequences of such far-reaching legislation.”
The bottom line, as Bowser noted, is that this is something business will have to learn to live with: “It’s time for employers to prepare, and for insurance companies to prepare.” 