Fewer Than 50 Staffers? Your Four Main Obamacare Options

Entrepreneur
August 7, 2013

BY Dinah Wisenberg Brin

Small businesses with fewer than 50 full-time employees -- or the equivalent -- as defined by the U.S. Affordable Care Act may wonder what they should do to prepare for employee open enrollment on the new healthcare exchanges this October.

If you're among those with questions, watch this recent webinar hosted by a state office of the U.S. Small Business Administration. In it, Frank Knapp Jr., president and CEO of the South Carolina Small Business Chamber of Commerce, shares the main options. We've listed the highlights below, but you can access it yourself here.

Option 1: Do nothing. Businesses with fewer than 50 "full-time-equivalent" employees aren't obligated to provide coverage under the ACA. These businesses can opt out of providing health insurance and take no action. In this scenario, employees will be responsible for obtaining their own health insurance and will be eligible for government premium subsidies if they qualify based on income and if they purchase coverage on the individual exchanges. Bear in mind that the law defines full-timers as employees who work, on average, at least 30 hours weekly, and counts the hours worked by part-timers toward an employer's number of full-time-equivalent workers.

To note: You may decide to "do nothing" as a business owner, but you're still required (as an individual) to obtain health insurance for yourself and family, either via the exchange, outside the exchange or through your spouse's employer.

Option 2: Do not offer health insurance, but offer help. These companies can find an insurance agent or broker to guide employees through the exchange, and help them choose the most appropriate coverage for themselves and their families. Qualifying employees will be eligible for subsidies under this scenario as well. Keep in mind that subsidies are not just for low-income Americans; many middle-class individuals and families will qualify as well. Brokers receive commissions from the exchanges and might negotiate fees with businesses, depending on the additional services they can offer you.

Option 3: Use the exchanges to offer one plan for all employees. Offer health insurance to employees through the small-business exchange in your state, choosing one plan for all employees. You can do this on your own or consult with an insurance broker or agent who also can handle enrollment. Employees enrolled in this plan will not be eligible for government premium subsidies. (The Obama administration expects that employers eventually will be able to offer employees a choice of plans on the small-business exchanges for coverage starting in 2015.)

Option 4: Obtain health insurance for employees outside of the exchange. Employers may do this on their own or through a broker or agent. By securing group health insurance outside the exchange, however, the employer will become ineligible for the tax credits that are available to many small businesses offering coverage through the official, state-based marketplaces. Employees won't be eligible for government premium assistance in this scenario.


Read more: http://www.entrepreneur.com/article/227674#ixzz2bOF4eRAE

Without Medicaid Expansion, Employers Face Higher Tax Penalties Under ACA

Study By Brian Haile
Senior Vice President for Health Policy
Jackson Hewitt Tax Service Inc.

March 13, 2013

Key Findings

 States that do not expand Medicaid leave employers exposed to higher “shared responsibility” payments under the Affordable Care Act (ACA).

 The associated costs to employers could total $876 million to $1.3 billion each year in the 22 states that have opposed, are leaning against, or remain undecided about expanding Medicaid. By way of example, the decision in Texas to forego the Medicaid expansion may increase federal tax penalties on Texas employers by $299 to $448 million each year.

 Any projections of the “net” costs of Medicaid expansions should reflect the very real costs of the shared responsibility penalties to employers in any particular state.

Click here to read the study

BlueCross sued for collusion

Powerhouse law firm takes on NC insurance company and other ‘Blue’ plans nationwide

By AMES ALEXANDER and JOSEPH NEFF
The State, Saturday, Feb. 09, 2013 

CHARLOTTE — A major lawsuit filed against BlueCross BlueShield of North Carolina has generated a flurry of class-action cases that, if successful, could result in lower health insurance premiums for tens of millions of Americans. 

The suit alleges that BlueCross plans nationwide have driven up health care costs by colluding to carve up the nation’s insurance market.

As the plaintiffs tell it, the arrangement works like this: 38 Blue Cross and Blue Shield plans nationally have illegally agreed not to compete on one another’s turf. Consequently, BlueCross plans in South Carolina and Virginia don’t compete with BlueCross BlueShield of North Carolina. 

BlueCross strongly disputes the allegations, saying that it is simply trying to get its customers the best prices available. The company says its territorial restrictions and contracts have withstood legal challenges and government scrutiny for years.

The plaintiffs – three Mooresville, N.C., residents and two small businesses – are represented by lawyers with a powerhouse firm in Washington, and some antitrust experts predict they will win in court.

The various BlueCross plans are independent insurance companies. But the lawsuit alleges that they have colluded through their national trade group – the Blue Cross and Blue Shield Association.

More competition would mean lower prices, the lawsuit contends. Instead, the arrangement has allowed the insurers to dominate their markets and to charge inflated premiums.

For years, BlueCross BlueShield of North Carolina required hospitals and other key health care providers to agree to contract provisions, commonly known as “most favored nation” clauses, which ensured that BlueCross received the best prices for health care services.

The lawsuit argues that those clauses stifle competition by preventing other insurers from negotiating for lower costs. That, in turn, leads to higher premiums at the other insurance companies.

BlueCross BlueShield of North Carolina, a not-for-profit company that is fully taxed, is the largest private health insurer in North Carolina, controlling more than 70 percent of the market. It has reserves of more than $1.8 billion.

In court filings, BlueCross said the N.C. Department of Insurance thoroughly regulates and approves its contracts with providers, including provisions like the MFN clauses.

BlueCross also said plaintiffs have yet to point to facts showing that the MFN clauses have driven up prices.

The U.S. Justice Department has been investigating whether BlueCross MFN clauses in North Carolina and other states violate antitrust laws. A BlueCross BlueShield of North Carolina spokesman said that the company is cooperating fully with the ongoing investigation.

The company said it is no longer including MFN clauses in new contracts and has recently removed them from old ones.

The North Carolina case, filed in early 2012, was the first of more than 20 class actions making similar allegations against BlueCross plans nationwide. Those cases recently have been consolidated before a federal judge in Alabama, which means that the litigation’s outcome likely would affect companies and policyholders nationwide.

Among those representing the North Carolina plaintiffs are lawyers from Boies, Schiller and Flexner, a high-profile Washington firm known for taking on complex cases. The U.S. government hired the firm’s chairman, David Boies, to litigate its antitrust case against Microsoft.

The Blue Cross and Blue Shield Association called the lawsuits “meritless.”

‘Benefits of competition’ 

But some antitrust experts find the plaintiff’s arguments credible. 

Duke University law professor Barak Richman, an expert on health care policy and antitrust law, said he thinks antitrust law is in the plaintiff’s favor.

“We’ve always known that Blue Cross of America uses its trademark to prevent competition,” he said. “And we’ve always questioned whether it’s legal.”

Nationally, “Blue” plans cover about 100 million Americans. 

Read more here: http://www.thestate.com/2013/02/09/2624801/bluecross-sued-for-collusion.html#storylink=misearch

2012 State Legislative Wrap-Up

Numerous legislative efforts were on the South Carolina Small Business Chamber of Commerce (SCSBCC) agenda this year.  While the Legislature will make one more trip back to Columbia to address some gubernatorial budget vetoes, the die has been cast for everything else.  And because this was the second year of the two year session, what did not get done now has to start from the beginning in January.

First the bad news.

INSURANCE INDUSTRY DEFEATS CONSUMERS

Health Insurance

To really have competition between health insurance companies you have to stop allowing the dominant carrier in the state, Blue Cross Blue Shield (BCBS), from contractually forcing healthcare providers to charge BCBS competitors higher fees.  This process is called the “most favored nation” clause in a contract.

If one health insurance company is guaranteed to have the lowest reimbursement rates for doctors and hospitals, that company has lower costs and thus can be more competitive in premiums charged.  But that company also has no incentive to drive down healthcare costs.  In fact, it has an incentive to allow healthcare costs to increase thus enabling it to make more profit through higher premiums.  As a result the other healthcare companies are forced to have higher costs and thus less competitive premiums.  With no market-driven containment on healthcare costs, premiums for all health insurance companies increase.

We supported S.316 which would have outlawed most favored nation clauses in health insurance company contracts with providers.  But S.316, which was introduced in January of 2011, never even got a subcommittee assignment from the Chairman of the Senate Banking and Insurance Committee.  You can probably figure out why. 

The last reason given to me by the Chairman, who was defeated in his primary election, was that BCBS was under federal investigation for using the most favored nation clause to restrict competition thus harming the consumer.  The Chairman didn’t think it was appropriate for the state to get out in front of the feds and possibly pass a law that might have to be changed later depending on the outcome of the investigation.

I didn’t buy the logic.  While it was true that the U.S. Justice Department has been (and probably still is) looking into the contractual practices of BCBS, confirmed by a call I received from the Justice Department to discuss the matter, this was a poor excuse for not moving S.316 along the legislative process.  

First, since when does South Carolina kowtow to the federal government?  We think nothing of sticking a finger into Uncle Sam’s eye whenever it means scoring some political points.  And if we can do that for partisan reasons, surely we can do that to help make health insurance more affordable for our citizens.

Second, a federal investigation would be looking at the past behavior of BCBS.  Legislation would address future behavior.  We should have been taking action to correct uncompetitive behavior going forward and let the feds worry about the past misdeeds.

The bottom line is that because the Senate Banking and Insurance Committee failed to promote competition between health insurance companies either because of the lobbying power of BCBS or the Chairman’s reluctance to hurt the fed’s feelings, South Carolinians will still pay higher rates for the same coverage compared to Georgians and North Carolinians right across the border.

Read more

Commentary: Small-business owners say the future looks bleak if health care law overturned

The Washington Post
April 1, 2012

By Jamal Lee

Last week, the nation’s attention was riveted to the Supreme Court, where oral arguments were being made over the constitutionality of the health care reform law, also known as the Affordable Care Act.

Pundits have been making one prediction after another as to how the high court will rule. But what we haven’t heard are predictions about what will happen to small businesses if the law is overturned.

As a group of long-standing small-business owners who have been suffering for decades under ever-rising health-care costs, it’s frightening to think the safeguards put in place by the law could be undone with the drop of a gavel.

The new law has already reined in costs through provisions such as the medical loss ratio, which requires at least 80 percent of small groups’ premium dollars be spent on patient care instead of administrative costs. Just a couple years ago, a member of our group — small-business owner Walt Rowen in Columbia, Pa. — was quoted a 130 percent increase to his premium. This year, because of the MLR provision, Walt’s premium increased by just 4 percent — the smallest increase he’s seen to his premiums in 10 years.

Numerous others in our group have benefitted from the small-business tax credits in the law. This year, at my recording studio in Laurel, I expect to receive money back from the credits that I’ll use not only to better afford insurance for my employees and myself, but to help grow my business. A lot has been said about the tax credits not being robust enough to help small-business owners, but as small employers constantly watching our bottom lines, we can say without hesitation that no small-business owner will ever turn down a tax credit — whether they think it’s robust or not. Free money is always welcome.

And in two more years, we’ll see even more help through state health insurance exchanges. We’ll be able to pool our buying power with our fellow small-business owners and enjoy the same kind of buying power large companies currently have. Not only would that lower our costs overall, but it would put us on a level playing field with big companies in recruiting and retaining talented employees.

For decades, we’ve listened to elected officials, insurance companies, the media and small-business organizations — including the National Federation of Independent Business, one of the plaintiffs in the suit — lament the high cost of health insurance for small-business owners. Double-digit and even triple-digit increases were the norm.

The Affordable Care Act is the first significant break small businesses have had regarding our health insurance costs. Without it, we’d be mired once again in a system that drains our coffers and hampers our growth. An economic analysis commissioned by the Small Business Majority found that without reform, our health care costs would more than double to $2.4 trillion by 2018 and 178,000 small-business jobs would be lost as a result.

Overturning the law would not help us. It would hurt us.

While the NFIB says it’s bringing this suit on behalf of small businesses, with all due respect to the owners who are members, most of the nation’s mom-and-pop businesses aren’t. Hundreds of thousands of us are benefitting from the Affordable Care Act in multiple ways.

We hope the Supreme Court justices are aware of that fact as they deliberate on this historic piece of legislation.

Jamal Lee is owner of Breasia Studios in Laurel. He co-wrote the piece with other members of the Network Council of the Small Business Majority, a Sausalito, Calif.-based organization.

http://www.washingtonpost.com/business/capitalbusiness/small-business-owners-say-the-future-looks-bleak-if-health-care-law-overturned/2012/03/30/gIQA1gVnpS_print.html

Medicaid feeds economy

Today the South Carolina House of Representatives begins debating the 2011-12 state budget. One important issue will be how to address Medicaid funding—reduce state funding and thus lose up to hundreds of millions in federal dollars or adopt a plan by the hospitals for them to pay extra into the Medicaid program to avoid the loss of federal funds.

In the letter below The South Carolina Small Business Chamber of Commerce weighed in on the issue with House members.
------------------------------------------------------------------------------------------------------------
March 14, 2011

Dear Representative:

Earlier this month we asked that the Legislature take a more business approach to budgeting in regard to spending cap legislation. As you begin the budget debate this week, no better example of a decision requiring a business approach will be the issue of Medicaid funding.

Some have expressed concern that taxpayers must be protected from increased taxes. However, the bigger fear for the small business owner is less money circulating through our economy that creates consumers. Starving our local economies hundreds of millions of dollars will worsen the economy at the very time it appears to be improving. If small businesses need protection, it is from a state-inflicted loss of customers.

Our hospitals have made a good business proposal to keep federal Medicaid funds from being dramatically reduced to our state and thus reducing the financial impact to themselves. By increasing their contribution to the state’s Medicaid program, they can help keep federal funding to our state from being dramatically reduced.

The importance of this to our small businesses is twofold. First, while our large urban hospitals might be able to weather reduced Medicaid compensation with few layoffs, the same is not true for our rural hospitals. These will certainly need to scale back their personnel costs regardless of the wishful predictions of those with little or no business experience. There will definitely be a negative economic impact on our rural communities and their small businesses struggling to survive.

Second, fewer Medicaid dollars for any health care provider will mean increased cost shifting to those with insurance. The fact that all of us with health insurance are paying for the uncompensated care of others is a primary reason for rising health insurance costs. Intentionally increasing this upward pressure on premiums, at a time when small businesses are hard pressed to offer employees health insurance due to costs, runs counter to the Legislature’s positive efforts to make health insurance more affordable (ex. raising the cigarette tax).

We strongly encourage you to accept the Medicaid funding proposal by the hospitals. It is a good business decision for them and for our small businesses.

Sincerely,

Frank Knapp, Jr.
President & CEO

The newly thankful for health insurance

There are thousands and thousands of employees across the country who have something to be very thankful for this Thanksgiving—new employer sponsored health insurance.

According to Bernstein Research there has been a 14 percent increase in businesses with fewer than 10 employees offering health insurance to their workers compared to last year. The authors of the study credit the business health insurance tax credits that went into effect this year as part of the new health care law.

Small businesses are not being burdened by the Affordable Care Act (ACA). They and their employees are benefiting from it.

Maybe that’s why health care reform—even after the health insurance industry paid the U.S. Chamber $86 million last year to convince Congress and the public that reform was evil socialism; and the U.S. Chamber’s lap dog, the National Federation of Independent Business, warned the country ad nausea of non-existent small business mandates in the legislation—wasn’t the all powerful voter issue predicted by Senator Jim “Waterloo” DeMint . Only 17 percent of voters mentioned health care as one of their issues affecting their vote. The economy was the dominant issue.

But even with this good news of more small businesses now being able to afford health insurance because of the ACA tax credits, the repeal of the reform is still being threatened by the empowered GOP in Congress.

What they are proposing is a $4 billion tax increase on all the small businesses that are and will be using the tax credits.

We didn’t vote for that either, did we?

Happy Thanksgiving!

Anticompetitive health insurance practices

One of the most popular parts of the new federal health care law is the establishment of the state insurance exchanges—large pools of customers for which insurance companies would compete to sign up for health insurance. Leveraging large numbers of customers to drive down insurance premiums is a concept loved by all—Democrats, Republicans, Libertarians, Tea Partiers, big business and small business.

But the idea relies on the premise that there is real competition in the health insurance market that actually works to drive down costs. Apparently that isn’t the case.

Many of us have been aware that the dominant health insurance company in a market demands that it be treated as a “most favored nation” by providers. In other words, these dominant insurance companies would negotiate fee rates with hospitals and other providers and require those providers to charge higher fees to the patients of other insurance companies. They leverage their volume of insureds to get a better deal.

In this way the dominant insurance company can always have more competitive premiums. If the providers don’t agree to play, the dominant insurance company can kick the providers out of their network thus reducing the provider’s revenue due to fewer patients.

This tactic makes it more difficult for other insurance companies to compete and insures (pardon the pun) that the dominant insurance company stays dominant.

As bad as this “most favored nation” tactic is for consumers because it reduces competition, it apparently is even worse than that.

Blue Cross Blue Shield of Michigan is being taken to court by the U.S. Justice Department and is accused of anticompetitive behavior that encourages higher provider rates and thus higher premiums.

Specifically, Michigan’s Blue Cross is being charged with “paying hospitals higher prices for medical care in exchange for a promise they would charge competing insurers as much as 40% more than they charge Blue Cross.”

The reality is that without real competition in the health insurance market because the “most favored nation” tactic is allowed, there is no incentive for insurance companies to try to get the lowest price for health care services. In fact, the companies make more money when the service costs rise because their built-in profit margins are a percentage of their health service cost payouts.

Is Michigan the only state where this is going on and forcing the individual and small group markets to pay inflated premiums due to a health insurance company greed?  I doubt it.