Employers are keeping a close eye on all matters related to health care reform as we approach a critical juncture at which the future of this legislation will be determined.  

What's on the horizon for health care reform?

A Ceridian Health Care Conversation with Jim O'Connell

jim-oconnell.jpgEmployers are keeping a close eye on all matters related to health care reform as we approach a critical juncture at which the future of this legislation will be determined. 

Jim O'Connell, Ceridian's executive consultant in Washington, D.C., explains what changes employers can expect in the coming months regarding the Patient Protection and Affordable Care Act (PPACA), and what companies should be focusing on today. (Hint: Some things never change. Compliance is still at the top of the list.)

How would you describe the status of health care reform right now?

Health care reform right now is on two separate tracks, currently running in the same direction, with one behind the other. The first, going full speed ahead, is insurance market reform, such as age-26 eligibility and the bans on pre-existing condition exclusions for children and lifetime limits. The second, which is much more controversial and slated to take effect in 2014, includes the individual and employer mandates, implementation of state exchanges and tax increases to finance premium subsidies. 

What can we expect in the coming months?

The most important development in the next few months will be the U.S. Supreme Court hearing arguments on the constitutionality of PPACA's individual mandate in March, with a decision expected in June. The court will decide not only the question of constitutionality, but also the issue of "severability": whether the rest of the law can stand if the individual mandate is struck down. 

In light of the inherent uncertainty of the Supreme Court ruling, as well as the upcoming elections, is there anything employers should be focused on right now?

One word: compliance. Employers need to pay strict attention to the effective dates of the insurance coverage mandates, including requirements like W-2 reporting, and make sure they implement plan changes to achieve compliance. 

What are some of the possible scenarios we face with 1) the Supreme Court ruling and 2) the election outcome?

On the Supreme Court ruling, if the individual mandate is struck down the immediate next question is whether the court will allow the rest of the law to stand. Many believe that the individual mandate, the employer "play or pay" mandate and the state exchanges are all inextricably intertwined. If the individual mandate is upheld then the next question is the elections. 

If Republicans win the White House, then new leadership at the Depts. of Health and Human Services, Labor and the Treasury will no doubt put the brakes on implementation of PPACA until Congress decides on amendments to the 2010 law. 

I might add that serious questions are being asked about the budgetary implications of this new entitlement program. Its $1 trillion, 10-year cost could be a big target in light of the $16 trillion public debt, annual trillion budget deficits and the great pressures already being felt on the Medicare program.

Regardless of the possible outcomes, what parts of health care reform do you think will stay intact?

There's little doubt that the insurance reforms, particularly to scale back underwriting practices, will remain in some form. Age-26 eligibility, the ban on pre-existing condition exclusions, the prohibition on annual and lifetime limits, preventive care with no cost-sharing, appeals and external review, W-2 reporting, etc., are likely to continue. 

What should employers be communicating to employees about health care reform?

Most important, avoid politics and don't try to predict what the Supreme Court will decide on the individual mandate. HR managers need to focus on communicating about the provisions of health care reform that are taking effect or have taken effect, e.g., W-2 reporting of the cost of employer-sponsored health coverage. 

What should they communicate about it? That it's for informational purposes only — no tax implications for employees. 

Is this a good time for employers to be reconsidering their benefits design for this year's open enrollment?

I think it's safe to say that HR managers should be always reconsidering their benefits designs. With costs soaring and the regulatory landscape changing constantly, benefits redesign needs to be an ongoing process. Innovation in health benefits design will be a hallmark of employer-sponsored coverage for years to come. 

Health care has definitely become a business issue for employers. How do you think that might evolve in the coming year?

It will depend on how health care benefits affect employer costs and competitiveness. A major trend is toward defined contribution-type health benefits such as consumer-directed, account-based health plans that give workers and their families more responsibility for health insurance decisions. Wellness and health management will be key parts of this trend. 

How is health care reform impacting your company's benefits strategy? Leave a comment below.

For more information:

  • Read Jim O'Connell's HR Legislation Blog
  • View an interactive health care reform timeline
  • Visit Ceridian's consumer-directed health care page