In a surprising turn of events, by redefining the healthcare law mandate as a tax, U.S. Supreme Court Chief Justice Roberts reaffirmed the constitutionality of PPACA.
The reaction by employers won’t be so surprising.
The employer-based system will be paying for this historic coverage expansion. So costs will be going up— significantly—particularly for insured plans. Therefore, employers are going to look to cut back and also manage risk.
The law mandates minimum essential benefits. These benefits will be much lower than employers provide today—so look for greater cost-sharing by employees.
Affordability will be determined as a percentage of income—so employers will be considering contributions based on salary, and higher-paid employees will pay more out of their paycheck.
Insured plans will be subject to rate-stabilizing formulas, so younger and healthier groups—as well as groups large enough to absorb risk—will self-insure. This will cause a spiraling adverse impact on insured plans.
Professional Employer Organizations (PEOs) will become more popular as smaller employers, unwilling or unable to self-insure, will look to take advantage of larger pools. I believe legislators will catch on to this and equalize the rules for these entities.
Employee activation will gain traction as both employer and healthcare consumers will realize that affordability starts well before the healthcare purchasing point: We will simply need to take better care of ourselves, because if we get sick it will cost us a lot.
In a recent survey, 52% of Americans think the law should be overturned in full or in part. Congress and rules-writers will continue to make incremental changes and miss deadlines, requiring extensions. But extensions won’t let employers off the hook.
So put a good healthcare advisor with wellness consulting experience on your speed dial.