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An afternoon panel brought together Indiana employers to discuss how the ACA is impacting their business as well as how they are preparing for the ACA’s implementation. The panel, moderated by Indiana State University Associate Professor John Liu, brought together panelists Jim Mills, vice president of human resources at Fairfield Manufacturing; Theresa Jasper, vice president of human resources at Hulman & Company and the Indianapolis Motor Speedway; and Seema Verma, president of SCV Consulting. Following are summary observations excerpted from each panelist’s remarks.
Jim Mills, vice president of human resources, Fairfield Manufacturing
The ACA is steeped in uncertainty. The floating regulation has created a constant flow of changes. It is not certain what the delayed employer mandate means. Nor do employers understand related tax changes that may be required. The Act is particularly hard for a union-based organization that typically negotiates benefits over several years. The bottom line is the ACA is a huge failure and we’re really disappointed in Washington.
The ACA will drive costs up faster than participation, and it is unsure how consolidation trends will impact access to physicians. There is a concern that family doctors will stop practicing and whether this situation might trigger the "utilization bomb". Employers also have to be aware of taxes that will support the expenses of providing health care. Beyond a three-to-four percent increase, there are additional non-outlier costs, and the uncertainty about what spouse/dependent provisions may mean in terms of cost.
Provider disruption is another consequence the ACA will impose. Networks are exceedingly narrow, limiting provider access. The narrow networks will force employers to develop self-provider status such as on-site clinics for the delivery of health care.
The ACA is certainly impacting staffing, even for organizations outside of health care. For example, organizations such as schools are starting to reconsider how they classify staff. The ACA is increasing the costs for employers to cover spouses and dependents while presenting numerous benefit redesigns. A new question arising is whether the exchanges will count as available coverage for spouses and dependents. The costs and uncertainties of the ACA could pose an employee relations nightmare.
Theresa Jasper, vice president of human resources, Hulman & Company and the Indianapolis Motor Speedway
As an organization that maintains several employee classifications including permanent, full-time; permanent, part-time; seasonal, part-time; and seasonal full-time; Hulman & Company had to be particular cognizant of ensuring compliance with ACA language regarding an employee’s status. The company focused on three key objectives:
The company’s HR team developed thorough documentations to assign due dates, identify tasks and assign performance responsibilities. In some cases, employees’ jobs were reclassified with an eye on ensuring compliance.
Seema Verma, president, SCV Consulting
Looking at the post-ACA environment, what is next for states? As the exchanges opened, the majority of states elected to implement the federal exchange option. The early troubles plaguing implementation have not come as a surprise to employers, especially considering that the political environment (2012 elections) created uncertainty and delayed distribution of information until following the election.
Efficiency has been an issue for the exchanges. For example, consumers frustrated with the web site may elect to dial a phone number to access a state exchange. Yet in some states, the application may be 30 pages long, requiring significant time for completion. At the federal exchange level, the Spanish language option was delayed until October 21. A central problem in evaluating the exchanges has been the inability to test prior to "going live". Additionally, little testing has been conducted for exception situations.
Looking at possible users of the exchange market in Indiana, there are potentially a half-million Hoosiers who might use the exchange to purchase their health care. Again, the networks offered are quite narrow. Among the four carriers offered by Indiana exchanges, there are 241 plans. The narrow networks present concerns about adequate capacity to meet demand and potentially longer wait times.
Capacity is also a concern for the exchanges. There has been some concern that Indiana residents may not be able to get their insurance set up through the exchanges by January 2014. The exchanges face an uncertain timeline and their structures may morph over time. For example, some states have discussed partnerships to create shared exchanges.
Cost is a further concern, as the market tries to determine if states may be able to run exchanges more cost-effectively than the federal option. However, given the complexity of the Act, it is unlikely that states will rush in to the business of setting up exchanges.
Looking at the effect of the ACA on premium rates, health care will probably cost more in 2014 for individuals in good health and younger individuals. The community rating component is likely to provide cost savings to individuals in poor health.
The tax credit on insurance premiums is another factor to consider. Individuals insured through the exchanges will have a 90-day grace period before they can be dropped for failing to make a payment. All claims will be paid in the first 30 days, with payments suspended between 31 and 90 days if payment is not received. Inevitably, there will be some individuals who drop out of the exchange system.
Looking at Medicaid expansion into states, 23 states are participating in the program while 27 states have opted "no" or remain undecided. States are concerned about the long-term sustainability of Medicaid, the inflexibility of requirements, and their ability to assure provider access to new enrollees. In Indiana, the state will need to figure out how to pay for Medicaid - an amount of $2B over 10 years. Given that states have proposed 1,115 demonstration waivers to expand Medicaid, the question of how to create an effective and workable system remains.
Summarizing input from the panelists, Jim Mills stated, "In summary, the ACA is a big unknown with lots of question marks."