4 Key Takeaways From The Long Island Business News’ Healthcare Power Breakfast
The Affordable Care Act, also known as healthcare reform and Obamacare, was signed into law in 2010. Five years later, the law is still creating uncertainty for small businesses.
In an effort to shed some light on the future of healthcare reform and its impact on the economy and employment, the Long Island Business News recently hosted the Healthcare Power Breakfast, which brought together leaders in healthcare, human resources, insurance, law and economics for an insightful panel discussion.
Lou Basso, Alcott HR’s President and CEO, was selected to provide his expertise, as Alcott HR has helped hundreds of businesses understand, plan for and comply with the ACA. He was joined by Kevin Dahill, President and CEO of the Nassau/Suffolk Hospital Counsel and the Northern Metropolitan Hospital Association; Dr. John A. Rizzo, Professor of Economics and Preventive Medicine, Stony Brook University and Chief Economist, Long Island Association; and Jay Silverman, Partner and Co-Chair of the Health Law Department for Ruskin Moscou Faltischek, P.C..
Together, they offered insight that can help small business leaders understand the current state of healthcare and prepare for what is coming next. Here are the key takeaways from the event:
1. The Affordable Care Act Is Not Going Away
Though the Affordable Care Act has been argued and debated, the panelists agreed that healthcare reform is not going away.
Basso, of Alcott HR, said that, because so many people are already utilizing some aspect of the Affordable Care Act to gain healthcare coverage, it’s highly unlikely for the law to be struck down.
“[The government] is not kicking millions of people off health insurance,” he said.
Silverman added that the best chance of repeal already happened, when Chief Justice John Roberts swung the Supreme Court’s decision in 2012.
“I’m not a betting person, but when it came to the Affordable Care Act and the Supreme Court’s determination a few years ago regards to its constitutionality, I personally thought that the law was going to be declared unconstitutional,” he said. “If I bet on it, I would have lost money.”
Even in the extremely unlikely event that the Affordable Care Act was repealed at the federal level, healthcare reform would still persist in New York. That’s because the state has received more than $245 million in federal funding to launch its exchange, which in turn has created jobs in both the public and private sector and has made people financially dependent on the revenues generated by the state’s healthcare marketplace.
“The New York exchange is here to stay,” Basso said.
2. Healthy People Are Staying Away, Leading To An Unhealthy System
There are 16 million people utilizing public health exchanges. However, a majority of these people tend to be older or unhealthy, which places an economic burden on the system overall. Rizzo described this relationship as “adverse selection.”
“Adverse selection means that sicker people will disproportionately choose to get insurance because it’s a better deal for them, and that can threaten the viability of the system,” he explained.
Dahill expanded on this point.
“Once people who were otherwise uninsured begin to get insurance, the first thing they do is go access the system,” he said. “So they now have a card, and they are going to show up at a doctor’s office or a hospital or a freestanding lab or whatever. So the notion that costs are going to come down because we are covering more people, in the short term, doesn’t work. In fact, costs are going to go up.”
In an effort to persuade more people – especially healthy people – to sign up, the ACA does levy penalties on people who choose not to get insured. However, the penalties are not stiff enough.
Basso explained that the average penalty is approximately $172, while the cost of healthcare coverage can equate to thousands of dollars. Thus, the young and the healthy are more likely to opt to pay the modest penalty than to opt into the expensive system.
3. It’s About To Get More Challenging For More Employers
Basso cautioned business owners that the past five years were just a primer for what is to come.
That’s because more businesses will be subject to the ACA’s employer mandate, which will be expanded to include businesses with 50-100 employees in 2016.
Businesses with 50 or fewer full-time employees have experienced increases as high as 20 percent, according to Basso. Starting in 2016, companies with 50-100 employees could experience increases of 20-25 percent, which will put even more pressure on business leaders.
In addition, the Cadillac Tax is set to go into effect in 2018. The Cadillac Tax will impose a 40 percent tax on employers that provide high-cost health benefits to their employees instead of offering more cost-effective plans.
4. The Whole Healthcare Model Is Changing
If there is any relief in sight, it will be driven by capitalistic forces, as healthcare providers, insurance carriers and individuals seek to minimize costs and maximize revenues.
That’s why walk-in clinics are popping up in record numbers – they are trying to attract relatively healthy patients who would otherwise go to more expensive emergency rooms. It’s also why upstarts like Oscar are entering the healthcare field, and why hospitals are forming networks and entering the insurance space for the first time.
There’s another shift taking place as well, one that will change the paradigm of profitability in healthcare.
According to Dahill, profitability in the healthcare sector has always been tied to utilization – the more patients being treated, the more money doctors, hospitals and insurance carriers made.
However, the ACA is changing this dynamic. As the government and insurers want to bring more healthy individuals into the system, they are realizing that the old focus on treating a high volume of sick people is counterproductive and, worse, not cost effective.
“Because it still remains a challenge getting everybody in [to the system], what the government and, quite frankly, the commercial insurers are doing is taking some of that risk that they’ve lived with all these years and shift it to the providers,” Dahill said. “They are saying to the providers that you now are going to have an incentive, and your incentive is going to be to reduce hospitalizations, keep people healthy, keep people well.”
How Are You Preparing For Healthcare Reform?
Whether your business is already dealing with the Affordable Care Act or if you are bracing for the employer mandate to apply to your business, you are not alone.
Every day, Alcott HR works with hundreds of small businesses just like yours, helping them understand the intricacies of healthcare reform and helping them develop an approach that enhances compliance and company performance.