Health Care: Continued Uncertainty Over PPACA’s Future, While Association Advances New Coalition Initiatives to Help Members
January 06, 2012
Funding deficiencies, state and federal inaction, the legal challenge pending before the Supreme Court and the upcoming 2012 elections are fueling employer uncertainty about the future of PPACA. Indeed, as the layers of the health care reform law are peeled back and problems emerge, it is becoming more apparent to the administration, Congress, and the states that the law will not work as written. Even supporters of PPACA have shifted strategies from calling it a success that will lower costs and reduce the deficit to acknowledging that the law will need to be improved, which makes Round Two of health care reform a near certainty. Yet, PPACA implementation efforts plod along slowly as the administration continues to issue regulations, which employers must comply with as they await court decisions and future legislative action that could produce further changes.
Supreme Court Decision Will Answer Some Questions, But Certainty for Employers Still Elusive Since its enactment, legal challenges to PPACA have created considerable uncertainty regarding the future of the health care reform law and its various provisions. Thus, the Supreme Court’s announcement that it would rule on the constitutionality of PPACA’s individual mandate by the end of June 2012 was welcome news for employers seeking to operate in an environment of greater legal certainty. However, under any scenario, the Court’s decision will still leave a number of issues unresolved:
Lack of Guidance, Drafting Errors, Cast Doubts on the Timely Establishment of Exchanges
- Should the Court find the individual mandate unconstitutional, it will also have to decide whether it negates the entire law or just the mandate.
- If only the mandate is struck down, Congress would need to address the problem this creates for health insurance companies which must accept all applicants and generally cannot raise premiums based on health conditions.
- If the individual mandate is upheld, it will increase the urgency of meeting the law's increasingly unrealistic deadlines, most importantly the January 2014 deadline for having the health care exchanges in place.
- Even a Supreme Court victory for the Obama Administration will not avoid the "repeal and replace" mandate that could emerge from a Republican sweep of Congress and the White House after the elections.
- Finally, it is possible that the Court could put off a decision on the merits by concluding that it lacks the jurisdiction to rule on the mandate until after its effective date in 2014. While many believe that this result is unlikely as none of the parties to the litigation requested it, the Court did take the rather unusual step of ordering that the issue be fully briefed and argued by an independent party.
New hurdles emerge on a regular basis to the establishment of health exchanges—the backbone of the health care reform law—making it increasingly unlikely that each state will have one up and running by the January 2014 deadline. Under PPACA, if a state refuses to set up a health care exchange or has not made significant progress in doing so by January 2013, the federal government must step in with its own federal exchange. So far only 17 states have passed legislation in some form establishing state exchanges, and it appears that many, if not most states, will not meet the January 2013 deadline. One reason is that there is considerable skepticism, particularly among some state governors, that there will be sufficient federal funding to fully implement state exchanges. Moreover, many states remain undecided about whether to establish an exchange because HHS continues to provide little information on what a federal exchange may look like, and the agency has indicated that it has no plans to issue regulations on federal exchanges. This could be due, in part, to the fact that PPACA provides financial grants for states to set up their own exchanges, but the Act does not provide money for HHS to set up the federal exchanges. Moreover, federal exchanges—unlike state exchanges—may not have the authority to provide premium assistance to lower income individuals because of a significant drafting error in the law. Meanwhile, delays in issuing regulations create significant difficulty for employers, making it virtually impossible for them to meet the March 2013 deadline for informing employees about their health care options. By that date, employers are required to give employees a detailed description of coverage options that will be available through exchanges.Key Regulatory Guidance Expected, But Recent Bulletin Concerns Employers
In 2012, the Departments of HHS, Labor and Treasury will issue regulations on several key issues, namely:
- The final rules for determining whether an employer-sponsored plan meets PPACA’s “affordability” and “minimum value” requirements, which determine whether employers must pay a penalty;
- Final regulations on PPACA’s four-page Summary of Benefits and Coverage (SBC) form, which employers must provide to each plan enrollee, likely to be issued in the spring of this year;
- Proposed regulations by the IRS defining “full-time employee” in a manner that provides greater flexibility in designing and maintaining health coverage for employers with large numbers of variable hour employees; and
- Guidance from the various agencies as to how they intend to streamline the massive information swap among employers, employees, exchanges, and various agencies of the federal government, on which HR Policy Association has urged a centralized process in the federal government in order to promote nationwide uniformity for multi-state employers.
Meanwhile, in December, HHS provided states with considerable flexibility in selecting an “essential health benefits” package. While the guidance clarified that self-insured employer plans do not have to provide such benefits, it has raised concerns among some large multi-state employers because almost all plans—including self-insured plans—are restricted from having annual or lifetime dollar limits on the value of “essential health benefits.” Thus, employers that utilize annual or lifetime dollar limits could be subject to different standards depending upon the state. The Association will be filing comments requesting that the federal government provide a uniform standard or create a safe harbor for self-insured plans.HR Policy Association Initiatives
The ongoing uncertainty surrounding the health care policy environment, coupled with the anticipated continued escalation of health care benefit costs, has led the Association to take aggressive steps to enhance its Coalition-based solutions currently available to members. Beginning January 1, 2013, the Retiree Health Access Coalition headed by Larry Steward, Vice President, Human Resources, DTE Energy, will launch a new retiree health care exchange called RHA Direct. Vendor selection is well underway for this new program which will be the only retiree exchange designed to serve both pre- and post-65 retirees by offering guaranteed issue coverage options to all retirees even if health care reform does not get implemented as passed. The Association's Pharmaceutical Coalition, chaired by Walter Oliver, Senior Vice President, Human Resources and Administration, General Dynamics, is also launching a prescription drug benefit program beginning January 1, 2013. The Coalition will contract with a network of preferred retail pharmacies who will offer substantially better pricing on drugs dispensed in retail stores than what employers currently pay through more traditional pharmacy benefit programs. The Coalition will also contract with a PBM to administer this unique approach, creating a turnkey solution for employers that is estimated to save a minimum of 10 percent off the cost of a more traditional prescription drug benefit plan.