Heartland Council Education Conference

September 29, 2011

Impact of Health Reform on Employers

Agenda• Introduction• Uncertainties Around Healthcare Reform• Key Components of Reform

– Benefit Exchanges– Individual mandate– Employer requirements– Case Study

• Summary– Impact on Employers– Controlling Costs/Primary care focus

• Q&A

Speaker BiosJay Eckersley• Senior Health Care Consultant with Gosser

Group, St. Louis and Principal at Employers Health Network, Springfield, MO.

• Currently advises employers, providers and health plans how best to integrate their respective interests to meet local marketplace demand for effective managed care contracting, guaranteed cost controls and published reporting of quality patient care outcomes.

• As CEO, 1999-2006, Jay Eckersley inspired and led St Johns Health System in Springfield Missouri to the top ten position in Verispan/SDI’s most Integrated Health Care Systems, nationally. Eckersley has held similar Health System Leadership positions in St. Louis, Columbus OH, Minneapolis-St. Paul and Salt Lake City.

Bruce Gosser• Bruce Gosser established Gosser Group, a

Healthcare Business Consulting company, in 2009. Bruce has over 30 years of experience in the Healthcare Industry and has built several businesses in this time. He has aligned the Gosser Group to build upon his previous experience and his visions of the industry’s future.

David Gosser• Marketing and Research Director at Gosser

Group in St. Louis.• As a consultant, David manages the

development and implementation of marketing and communications strategies for healthcare organizations. He has focused on the delivery and payment changes created in health reform and the movement towards patient-centered care.

Gosser Group is also comprised of Medical and Nursing Directors along with IT and Operations Consultants

Uncertainties of Reform

• Minimum requirements for plans• Premium rates through the exchange• Will individual mandate be over-ruled?• Little change to delivery system doesn’t

address high cost growth

Implementation Timeline

2010: Reform Enacted•35% tax subsidy available to small employers (<25 FTEs) until 2014

2011:•MLR Guidelines take effect

•Retiree drug subsidy ended

2014:•Benefit exchanges offered to public

•Individual and employer fines begin

•50% tax subsidy available to small employers (<25 FTEs)

2019:•Full Implementation of Reform

•32 million additional Americans are covered

2018:•Excise tax on high-cost plans

Patient Protection and Affordable Care Act (PPACA) requires many bipartisan refinements

Three Key Components of Reform for Employers

• Benefit Exchanges• Individual Mandate• Employer Requirements

Benefit Exchanges

• Regulated marketplace for insurers to offer plans to individuals and small businesses

• Greater coverage and more transparencies• Tax subsidy for employer-based coverage

remains in place• 400% of poverty level or less eligible for

income-based subsidy

Individual Mandate and Coverage

Individuals who remain uninsured will realize a tax penalty• Penalty of $695/person/year to a maximum of $2,085 per

family or 2.5% of family income by 2016• Exemption through financial hardship (cost is greater than 8%

of income) and religion• For larger firms, this mandate reinforces the employer fines

Medicaid Expansion• Up to 133% of federal poverty level• Medicaid payments to primary care physicians will increase to

100% of Medicare rates in 2013 & 2014

Employer Requirements

• $2,000 penalty per FTE for business over 50 FTEs not offering insurance

• Excise tax on high-cost plans– 40% tax on the top portion of plans costing over

$27,500 for family and $10,200 for individuals• Children can remain on policy until 26• No lifetime or annual maximum benefit limits• Termination of retiree drug subsidy

Key Details of Employer Penalty

• Penalty is only effective if 1 worker receives subsidy through the exchange

• Part-time employees are included in the total count of workers

• Fair Labor Standards Act amendment – prevents firing of workers who trigger the fine– avoidance of hiring new workers needed

• Tax subsidy for employer-based coverage remains in place

Next Steps for Employers

• Determine value of benefits by offering insurance to employees or by having them acquire insurance through benefit exchanges

• Re-evaluate benefit design packages– Reduce costs– Promote responsible use– Wellness incentives

Low-Income Workers Can Benefit from Exchanges

• A worker earns about $20,000 • The employer contributes $3,000 towards

$4,000 policy • Maximum subsidy of $1,500 per worker • Worker could be eligible for larger subsidies

through exchange (or Medicaid) and would receive higher wages if the firm did not offer them health insurance

Provide Coverage to Avoid Fine

• Employee cost for coverage is $4,000• Employer cost is $5,000

After Reform• Fine of $2,000 per worker• Individual fine of $695• New “value” of coverage is $6,695

Summary

• Impact on Employers• Top Employer Concerns• Key Considerations• Controlling Costs

Heartland Council Education Conference

Contact UsJay Eckersley: (315) 272-7878David Gosser: (314) 402-3744