Now that sweeping health care reform has been signed into law, eventually providing health care to 32 million uninsured Americans, the fun begins for companies trying to fine-tune their employer-sponsored health programs.
Although penalties and higher taxes have received a good deal of press, they represent only part of the equation, according to panelists at a recent forum, “Health Care Reform and U.S. Business—A Diagnosis,” part of the second annual Tax Policy Symposium co-sponsored by a team of academic and professional organizations: Emory University’s School of Law, Goizueta Business School, and the Rollins School of Public Health; the Georgia Chamber of Commerce; McKenna Long & Aldridge LLP, an international law firm; and BDO Seidman LLP, a professional services firm that is part of a global accounting and consulting network.
“Everybody has to have skin in the game,” says panelist Tony Holmes, partner and senior consultant at Mercer Health & Benefits LLC, a global provider of employer-sponsored health and benefits services. “One of the biggest reasons our costs are significantly higher is because during the last 10 to 15 years, people have become less healthy.”
The panel discussion and subsequent interviews focused on the practical effects of health care reform legislation and tax policy on employers, from direct obligations related to employee enrollment to cost-savings opportunities for small businesses.
Health care poses a complex social challenge, the panelists say, because employees often fail to prioritize their health, preferring to spend money on immediate necessities like food and transportation.
“When you are giving people the choice, they tend to put their health care last,” says Holmes, adding that employees often view health care spending as what you do when you’re sick, rather than paying for preventative care. “As an employer, you have to look at the population and decide from a ‘total rewards’ compensation and benefits perspective what to offer.”
Large employers like The Home Depot have helped contain escalating health care costs by implementing wellness programs. Panelist Lesley Leiserson, benefits director for The Home Depot, says employees are exhausted at the end of the workday and are filling up on fast food and raiding vending machines.
The Home Depot’s senior leaders have embraced wellness initiatives such as designating wellness coordinators in every store and offering health assessments, a free tobacco cessation program, and free preventative care in all health plans. Employees who actively enroll in their medical plans are entered into a drawing for free medical coverage for a year, says Leiserson. Stores also boast makeshift indoor tracks with mile markers for employees who want to walk a lap without venturing to the gym.
“We’re trying to encourage a healthier, more productive population,” she says.
Other employers also offer nutrition counseling, weight management programs, and smoking cessation groups as a supplemental form of insurance policy, says moderator Ann Murray, a partner overseeing the employee benefits and executive compensation practice at McKenna Long & Aldridge.
“If you spend a dollar over here to try to get someone to quit smoking, it may save you $1 million in cancer treatment down the road,” she says.
With a dizzying number of new compliance requirements stemming from the health care overhaul, Murray urges employers to relax and take a step back.
“A lot of these changes are not going into effect immediately,” she explains during an interview after passage of the health care bill. “From a practical perspective, don’t go amending everything you have now. You’re just going to have to further modify down the road.”
Among the changes being rolled out over the next six months are tax credits for small businesses with fewer than 25 full-time employees to purchase health insurance, extended coverage for adult children until age 26, and no pre-existing condition exclusions for children under age 19. One short-term change that could pack a financial wallop on self-insured plans is the removal of lifetime caps on health coverage. The result could be higher premiums for all employees of large corporations, says Murray, as self-insured plans switch to private insurers to better predict future costs.
While employers will face stricter reporting requirements on W-2 forms beginning in 2011, the biggest changes—penalties paid by employers for not offering insurance to employees and an excise tax on high-cost employer-sponsored health plans—are scheduled to take effect in 2014 and 2018, respectively. As employers pull back on “Cadillac plans” and pursue lower-cost alternatives, Murray says they will be forced to navigate delicate situations, such as what to do when a key employee requires a higher level of care.
“It’s going to be a big headache for business,” she predicts. “When Massachusetts passed health care reform, companies spent millions just getting their tracking and reporting systems in compliance.”
In the end, comprehensive health care reform will require the fragmented private and public sectors to “get together and figure out what they want,” says Mercer's Holmes. “There are solutions, but they all involve some level of trade-off and risk.”
According to Holmes, “the health care system has fundamental flaws, but the biggest challenge is cost,” he adds. “In the end, you’re only going to control cost in anything if people pay for it. They have to be engaged in that consumer health purchasing decision.”
Originally posted at Knowledge@Emory.
