Health care changes come with anxiety, frustration

There is a clear sense of anxiety and frustration among even those who understand how medical insurance works and how the new federal health care law is theoretically designed to change the system.

Broader implementation of the federal health care law approved in 2009 – commonly referred to as Obamacare – will begin in October when states must provide a “marketplace” for consumers to shop for health insurance plans within Arkansas’ Health Insurance Marketplace (HIM). Enrollment in the HIM begins Oct. 1, and ends March 31, 2014.

An estimated 500,000 Arkansans are expected to gain health care insurance through Obamacare and Arkansas’ “private option” plan approved during the recent Legislative Session. The insurance plans range from plans on the books now to taxpayer-subsidized insurance.

‘UNCERTAINTY’ AND FRUSTRATION
Dennis Jumper, owner of Conway-based Arkansas Training Solutions and a lead healthcare-implementation trainer for the state of Arkansas, said “everybody is pulling their hair out” trying to get consistent information on new rules and regulations.

Cal Kellogg, an executive vice president for Arkansas Blue Cross Blue Shield, said, “The issue for us is all the uncertainty it creates.”

With less than 30 days before insurance carriers have to submit qualifying plans for Arkansas’ HIM, Arkansas QualChoice President & CEO Mike Stock said the company is “continuing to assess and implement operational changes needed to meet demands of new law.”

Jennifer Parks, who represents HealthPointe Insurance Services and has clients in the Northwest Arkansas and Fort Smith areas, said frustration is building among agents and business owners who can’t get pricing plans and policy guidelines for 2014.

“People are terrified because they don’t know what is going to happen,” Parks said.

TO PAY OR NOT TO PAY
Parks said in the past few months she has signed up three groups of more than 50 employees who did not have health insurance. One of the businesses has operated for about 15 years.

“The reason they did it, the reason these groups signed up, is because they knew they were going to have to do it eventually,” Parks said.

She was quick to add that the three groups are an exception. More business owners are mulling their options, with one of those options paying a penalty for not offering a health insurance plan.

The law requires a company employing 50 or more full-time equivalent employees (FTE) to offer insurance. In the first year, the penalty for an employer is $2,000 per employee, with the penalty exempted for the first 30 employees. If a company has 51 employees and decides to not offer insurance, the penalty the first year is $42,000 ($2,000 x 21 employees).

Depending on the situation, Parks said the penalty could be less than what the employer would pay to provide insurance to all employees. Kellogg, with Arkansas Blue Cross Blue Shield, said the per employee penalty could rise to $3,000 if an employee is contributing more than 9.5% of their W2 wage to pay the premium on an insurance plan offered by the employer.

“It can get complicated fast,” Kellogg said.

Kellogg said the initial thinking was that many employers would simply “walk away” from providing insurance, which would send their employees to the Arkansas HIM to obtain coverage. But there are more factors than just the cost. Kellogg said paying for employee insurance is tax deductible, but the penalties are not. Also, employees can contribute to premiums with pre-tax income, but the pre-tax option is not available for the employee who buys insurance through an exchange.

“When we take employers through that process ... what they find is that it ends up being a better deal for the employer and most of their employees if they continue to offer the coverage,” Kellogg said, adding that an employer also has to factor in the cost of keeping good employees happy.

HIGHER COSTS LIKELY
Parks agreed that employers want to do the right thing, but employers also have to live within a budget. The potential for higher insurance premiums is another big unknown.

Insurance companies aren’t providing guidance on premium costs in 2014 because of several factors that create uncertainty for the actuaries who determine such rates, Parks said. She said one factor is that there will be many more “lives” covered by insurance, and many of those new lives are those who previously couldn’t afford or couldn’t get insurance.

“The insurance companies know that many of them (newly insured) are the ones who will utilize a lot of services,” Parks said. “We all know that will drive up the costs.”

Kellogg agreed.

“Early on, we expect a lot of usage of the insurance,” he said.

And while there will be pressure on the medical and insurance system in the short term, Kellogg said in the long term “maybe this will cause us to focus on the real issues of cost and quality and how medical care is delivered.”

The goal, of course, is to reduce the number of Arkansans without health insurance.

Stock, with QualChoice, provided info from a March 2013 report published by the Society of Actuaries that estimated the change in insured after three years of exchanges. The estimate was that the percentage uninsured nationally will decrease from 16.6% to between 6.8% and 6.6%. In Arkansas, the number of uninsured in three years will fall from 18.1% to between 10% and 4.9%.

‘MASS EXODUS’
But for Parks and her clients, getting through the short term is trying – especially when insurance carriers are not yet willing to provide 2014 rates for some plans.

“They won’t even give you a ballpark figure because they are saying the numbers are so high that they are hoping they are wrong,” Parks explained.

Parks said she is aware of a company with 600 employees where the decision makers have “run the actuarial tables” and believe the penalty may be the best financial option for the company. Officials with the self-insured company are waiting for more clarity on the rules, regulations, policies and prices. If the rules are too onerous and the premiums are too high, Parks predicted a “mass exodus” of small employers who will drop group plans and choose to take the penalty.

“We are holding our breath basically, until January 1st. If on January 1st, if the rates go up for my employers, they’ll drop their plans because many of them are already at the high end of their budget. They all want to do the right thing for their employees, but if it goes up sky high, they will not have any choice. It will be either close the doors ... or drop the plan,” Parks said.

‘MORE QUESTIONS THAN ANSWERS’
As Kellogg noted, educating people about the process helps ease the uncertainty, but according to Jumper, there remain many blank pages in the rule book.

“I have more questions than answers. The real world will not know (the key rules and regs) and will probably not have things really firm until late August,” Jumper said. “With that (uncertainty) you have business owners that can’t make informed decisions. ... And who knows at this point what those (2014) rates will look like.”

For Jumper to be uncertain highlights the extent of how little is known just a few months before exchanges in all 50 states are supposed to be up and operating.

Working for the Arkansas government through the network of Arkansas’ community colleges, Jumper is training the people who will train “in-person assisters” (IPA).  The assisters will travel the state explaining the rules and regulations to insurance agents, human resources workers and other people involved in the health care insurance process.

“They (IPA) will be the folks that the state will be equipping and then you have a second group of people who are called ‘navigators’ and they will be federally funded folks ... who will also be doing a lot of what the IPAs are doing,” Jumper said.

He estimated as many as 560 state-funded assisters will be used.

SHORT TESTING TIME
Not only is there uncertainty about what is mandated through the new rules, but Jumper said the expedited time in which insurance carriers must develop new plans has added to the tension. He said the normal cycle for an insurance company to roll out a new product is 18-24 months.

“What we’re looking at here is doing the same thing, but doing it in less than a six-month time frame,” Jumper explained.

Kellogg said the schedule is tough. The insurance carriers have to submit their plans (pricing, policies, etc.) to state officials by June 30. The state has 30 days to review and must have recommended policies to the U.S. Department of Human Services by July 31. The federal HHS is expected to issue its decisions by Sept. 4, Kellogg said.

The expedited time frame has also crunched the testing of computer systems needed to connect the insurance carriers, state officials and federal officials. With “several hundred thousand people” expected to enter the exchanges in just a few months, Kellogg said government officials “are only going to give us about three weeks to interact with their system.”

‘NOBODY HAS THE ANSWERS’
There are rumors that full implementation of the federal health care law approved in 2009 could be delayed to provide more time for all parties to adjust to new policies, prices and other factors.

Jumper doubts a delay will happen, but would not rule it out.

“My official position is that I tell everyone, ‘It’s coming. Be ready to go.’ But it would not surprise me one bit that in the first part of July or in August that a big decision is made to push this off for another year,” Jumper said.

He also suggested the members of Congress who supported the law may want to delay full implementation “because they probably don’t want this to blow up in their face during that election year in 2014.”

The one thing of which Jumper is certain is that each day delivers either more clarity, or a change to the previous clarity.

“Every day is a new day. Nobody has the answers. If anyone thinks they do, they’re a fool.”