1. Lockton modeling suggests some restaurant operations could see rate increases of 136 percent because of ACA reforms alone, said Sarah Osborne. | 2. Benefit costs remain a concern, said Jonathan Cohn, but he’s feeling less anxiety over ACA. | 3. Wayne Powell noted the significant communications challenge ahead of corporate HR staffs. | 4. Larger employers, said Ron Rowe, have a more stable outlook than their small-business counterparts.


Vulnerability

Rick Kahle asked his colleagues what might cause certain business groups exposure to the whims of the ACA.

“Every employer is vulnerable to some extent,” said Ed Fensholt. The vulnerability is greatest for those industries that employ many low-wage, hourly employees. The ACA will mean an increased cost of coverage, a “significant hassle factor,” and a tax and fee load, direct or indirect.

The analysis presented by Sarah Osborne, which takes into account the total impact of mandates, taxes, fees, and possible penalties, estimates a 136 percent cost increase for some restaurant groups above what otherwise might have been anticipated.

“No matter what industry you’re in,” Osborne added, “you’re going to have the effects of trends and increased cost due to trends.” But there will be increases just
for health reform on top of trends.

As Fensholt cautioned, though, “It’s almost impossible to estimate the cost impact of rolling out health-care programs to a group [of employees] that has not had health insurance before.”

Plan sponsors are going to be required to make an offer for people who were previously not enrolled. Kahle called this uncertainty “the biggest wild card in the deck.”

Added Osborne, no one knows “what these people are going to do, what decisions they are going to make, or how well-informed are they going to be.” This is one reason why communication is so critical before implementation starts.


New Entrants

As Rick Kahle explained, on Jan. 1, 2014, companies with a full-time equivalent of 50 or more employees will have a “pay or play” decision to make. The actuarial data prepared by Lockton for firms with 50-plus employees show a fairly small impact for certain industries—for example, in the energy field and in government, where most people that are full-time are eligible for coverage now.

Kahle continued that in the hospital and construction sector, the ACA’s enrollment mandates will have a moderate impact, and in the restaurant and hospitality fields the impact could well be dramatic.

Kahle asked his colleagues if their plans had calculated the risks involved. For Yarco, said Jonathan Cohn, “the largest factor” is the eligible population not under a health-insurance plan today. This problem is compounded by the uncertainties in the individual’s decision-making and in the regulations themselves. The solution, as he sees it, is an effective communication plan to help employees understand what options and benefits are available to them.

For small groups and individuals, said Blue KC’s Danette Wilson, rate increases are potentially “staggering,” but, she added, there is a “large spectrum” of possibilities. “The ACA does take care of the access issue,” continued Wilson. Unfortunately, it has exacerbated the cost issue, because millions of Americans—who don’t have coverage today—will soon have it, and somebody has to pay for that through subsidies and taxes.

Ron Rowe confirmed that large group outlook is little bit more stable than that for small groups. The “spectrum” that Wilson talked about could easily range from a decrease in coverage cost of 30 percent to an increase of 130 percent. Rowe anticipates that the traditionally healthy, low-risk groups will face increases, and that high-utilizing groups will see the decreases.

The new community rating structure is the reason why. Today, the BCBS rate for the oldest, least-healthy participant might be more than 20 times the rate for the youngest and healthiest. With community rating, that differential will be compressed to a factor of three, and not without certain inequities built in.

“You’re doing incentive programs to help your employees stay healthy and the guy next door gives all his employees a six-pack and a pack of cigarettes every Friday” as a reward, said Rowe, but “your rates are going to be the same.”