“First thing,” said Salts, “you have to have a plan that’s compliant.” If not, there are steep penalties. With Lockton’s help, KBP is designing a compliant plan, not the most robust one on the market, but a “decent” one. What Salts does not know
is what the uptake rate will be. Will someone making, say, $15,000 a year be willing to pay $1,000 for health care if the penalty is only $95 not to?
KBP has done the sensitivity tables.
If participation moved from 15 percent to 25 percent, said Salts, that would be “a very significant cost increase.”
To be eligible as a full-time worker, an employee must work a minimum average of 30 hours a week. The question was raised as to whether service industry employees would be tempted to shift hiring to part-timers. Salts does not intend to. “That’s not an issue we’ve felt like we’ve had to face,” he said. Sarah Osborne recommended that employers “have a strong definition of who your part-time and full-time people are.”
Bickford Senior Living has had to change its plan design to accommodate change, said Christy Dienstbier. Given that its 2,000 employees work three shifts, “communication is a huge thing for us.” Adding to the complexity, as David Gentile noted, is whether the individual is eligible for subsidy or not.
“That creates another level of anxiety for the individual,” said Gentile,” and for the employer remains an “unknown.” Recruiting is another issue still, said Rick Kahle. “You have to have a compelling offer for [employees] to come to work for you.”
Plan Design
For those employers thinking to keep their employee base under 50 to avoid the regulatory burdens imposed on larger employers, Ron Rowe offered a caution. Once an employer goes under 50, “Your negotiating capabilities are gone.” That employer can only offer certain products at certain rates.
BCBS has filed any number of plan designs with the federal government as mandated. There will be numerous options, including Health Reimbursement Arrangements and Preferred Provider Organizations, although probably no HMOs in the small-group market. The ever-changing regulations have made planning very difficult for everyone. Rowe recommended a wait-and-see attitude for 2014 as these regulations sort themselves out.
Rick Kahle asked plan sponsors if they were comfortable going to their employees and offering a smaller network. Yes, said Steve Best, but only if they could show that such a move would lower costs and improve quality.
Matt Condon had a similar response about sharing news about cost increases. Employees have to understand that “we’re all in this together.” Rates have to go up, but if the employees work to improve their collective health, the company can mitigate exposure.
The reality is, said Kahle, plan sponsors are “driving 80 mph down the highway, while trying to change a couple tires, and there are forks coming in the road.”
Closing Thoughts
David Gentile of Blue Cross Blue Shield of Kansas City acknowledged the “morass of all the changes that are coming from the ACA.” He strongly encouraged employers to get their analysis of those changes started right now, if not sooner. “They must make sure they’re in a good position and understand what the ramifications are to their business model going forward,” he said.
Rick Kahle of Lockton agreed and urged his colleagues “to understand the specific implications of the ACA to your program”—while there is still time.