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Thread: Health Law Costs: Employers Eye Bare-Bones Plans - WSJ.com

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    Health Law Costs: Employers Eye Bare-Bones Plans - WSJ.com

    This is just one more example of the built-to-fail nature of Obamacare. I've boldfaced the key sentence, in which one of the drafters of the scheme cheerfully admits that it never occurred to him that employers might "do what they have to do" in order to avoid the penalties attached to the employer mandate. The people behind this abomination were both stupid and arrogant, and they have saddled the nation with a wrecked system for financing and obtaining healthcare.

    Health Law Costs: Employers Eye Bare-Bones Plans - WSJ.com

    Employers are increasingly recognizing they may be able to avoid certain penalties under the federal health law by offering very limited plans that can lack key benefits such as hospital coverage.

    Benefits advisers and insurance brokers—bucking a commonly held expectation that the law would broadly enrich benefits—are pitching these low-benefit plans around the country. They cover minimal requirements such as preventive services, but often little more. Some of the plans wouldn't cover surgery, X-rays or prenatal care at all. Others will be paired with limited packages to cover additional services, for instance, $100 a day for a hospital visit.

    Federal officials say this type of plan, in concept, would appear to qualify as acceptable minimum coverage under the law, and let most employers avoid an across-the-workforce $2,000-per-worker penalty for firms that offer nothing. Employers could still face other penalties they anticipate would be far less costly.

    It is unclear how many employers will adopt the strategy, but a handful of companies have signed on and an industry is sprouting around the tactic. More than a dozen brokers and benefit-administrators in 10 states said they were discussing the strategy with their clients.

    "There had to be a way out" of the penalty for employers with low-wage workers, said Todd Dorton, a consultant and broker for Gallagher Benefit Services Inc., a unit of Arthur J. Gallagher AJG -0.07% & Co., who has enrolled several employers in the limited plans.

    Pan-American Life Insurance Group Inc. has promoted a package including bare-bones plans, according to brokers in California, Kansas and other states and company documents. Carlo Mulvenna, an executive at New Orleans-based Pan-American, confirmed the firm is developing these types of products, and said it would adjust them as regulators clarify the law.

    The idea that such plans would be allowable under the law has emerged only recently. Some benefits advisers still feel they could face regulatory uncertainty. The law requires employers with 50 or more workers to offer coverage to their workers or pay a penalty. Many employers and benefits experts have understood the rules to require robust insurance, covering a list of "essential" benefits such as mental-health services and a high percentage of workers' overall costs. Many employers, particularly in low-wage industries, worry about whether they—or their workers—can afford it.

    But a close reading of the rules makes it clear that those mandates affect only plans sponsored by insurers that are sold to small businesses and individuals, federal officials confirm. That affects only about 30 million of the more than 160 million people with private insurance, including 19 million people covered by employers, according to a Citigroup Inc. C +1.66% report. Larger employers, generally with more than 50 workers, need cover only preventive services, without a lifetime or annual dollar-value limit, in order to avoid the across-the-workforce penalty.

    Such policies would generally cost far less to provide than paying the penalty or providing more comprehensive benefits, say benefit-services firms. Some low-benefit plans would cost employers between $40 and $100 monthly per employee, according to benefit firms' estimates.

    "For certain organizations, it may be an ideal solution to minimize the cost of opting out," said David Ellis, chief executive of Youngtown, Ariz.-based LifeStream Complete Senior Living, which employs about 350 workers, including low-wage housekeepers and kitchen staff. Mr. Ellis, who was recently pitched a low-benefit plan, said it is one option the firm may consider to lower costs and still comply with the law, he said.

    Administration officials confirmed in interviews that the skinny plans, in concept, would be sufficient to avoid the across-the-workforce penalty. Several expressed surprise that employers would consider the approach.

    "We wouldn't have anticipated that there'd be demand for these types of band-aid plans in 2014," said Robert Kocher, a former White House health adviser who helped shepherd the law. "Our expectation was that employers would offer high quality insurance." Part of the problem: lawmakers left vague the definition of employer-sponsored coverage, opening the door to unexpected interpretations, say people involved in drafting the law.

    The low-benefit plans are just one strategy companies are exploring. Major insurers, including UnitedHealth Group Inc., UNH +1.13% Aetna Inc. AET +0.86% and Humana Inc., HUM +1.39% are offering small companies a chance to renew yearlong contracts toward the end of 2013. Early renewals of plans, particularly for small employers with healthy workforces, could yield significant savings because plans typically don't need to comply with some health law provisions that could raise costs until their first renewal after Jan. 1, 2014.

    Insurers and health-benefits administrators are also offering small companies a chance to switch to self-insurance, a form of coverage traditionally used by bigger employers that will face fewer changes under the law. Employers are also considering limiting workers' hours to avoid the coverage requirements that apply only to full-time employees.

    "You're looking at ways to avoid being subject to the law," said Christopher F. Koller, health insurance commissioner of Rhode Island.

    Regulators worry that some of these strategies, if widely employed, could pose challenges to the new online health-insurance exchanges that are a centerpiece of the health law. Among employees offered low-benefit plans, sicker workers who need more coverage may be most likely to opt out of employer coverage and join the exchanges. That could drive up costs in the marketplaces.

    "The whole idea is to get healthy people in and not-so-healthy people in" the marketplaces, said Linda Sheppard, special counsel for the Kansas Insurance Department.

    Experts worried that plans lacking hospital or other major benefits could leave workers vulnerable to major accidents and illnesses. "A plan that just covers some doctor visits and preventive care, I wouldn't say that's real health-insurance protection," said Karen Pollitz, a senior fellow at the Kaiser Family Foundation and former federal health official.

    Officials at the Department of Health and Human Services said they haven't seen widespread evidence of such strategies. They said the health law would bring new options, including the subsidized exchange plans, to low-income workers, and that most employers who offer coverage now choose to provide much more robust benefits.

    "Any activities that take place on the margins by a small number of employers would not have a significant impact on the small group or the individual market," said Mike Hash, director of the department's Office of Health Reform.

    Limited plans may not appeal to all workers, and while employers would avoid the broader $2,000-per-worker penalty for all employees not offered coverage, they could still face a $3,000 individual fee for any employee who opts out and gets a subsidized policy on the exchanges.

    But the approach could appeal to companies with a lot of low-wage workers such as retailers and restaurant operators, who are willing to bet that those fees would add up slowly because even with subsidies, many workers won't want to pay the cost of the richer exchange coverage.

    A full-time worker earning $9 an hour would have to pay as much as $70 a month for a midlevel exchange plan, even with the subsidies, according to Kaiser. At $12 an hour, the workers' share of the premium would rise to as much as $140 a month.

    Firms now offering low-cost policies known as mini-meds, generally plans that cap benefits at low levels, could favor the tactic. Companies sought federal health department waivers to cover nearly four million with mini-meds and other similar plans, which will be barred next year. Some employers are "thinking of this as a replacement for the mini-med plan," said Tracy Watts, national leader for health-care reform at Mercer, a consulting unit of Marsh & McLennan Cos. MMC +0.74%

    San Antonio-based Bill Miller Bar-B-Q, a 4,200-worker chain, will replace its own mini-med with a new, skinny plan in July and will aim to price the plan at less than $50 a month, about the same as the current policy, said Barbara Newman, the chain's controller. The new plan will have no dollar limits on benefits, but will cover only preventive services, six annual doctors' visits and generic drugs. X-rays and tests at a local urgent care chain will also be covered. It wouldn't cover surgeries or hospital stays.

    Because the coverage is limited, workers who need richer benefits can still go to the exchanges, where plans would likely be cheaper than a more robust plan Bill Miller has historically offered to management and that costs more than $200 per month. The chain plans to pay the $3,000 penalty for each worker who gets an exchange-plan subsidy.

    But, "those are going to be the people who will be ill and need a more robust plan," and insuring them directly could cost even more, Ms. Newman said.

    Many more workers, she expects, will continue to go without insurance, despite the exchanges and the limited plan. Currently, only one-quarter of workers eligible for the mini-med plan take it. Ms. Newman said, "We really feel like the people who are not taking it now will not take it then."

    Tex-Mex restaurant chain El Fenix also said it would offer limited plans to its 1,200 workers, covering doctors visits, preventive care and drugs, but not hospital stays or surgery. "What our goal was all along was to make [offering coverage] financially palatable for the company as a whole, so we didn't do damage and have to let people go or slow down our growth," said Brian Livingston, chief financial officer of Dallas-based Firebird Restaurant Group LLC, owner of El Fenix.

    Some benefits advisers worry that since the idea of the low-benefit plans is so new, they could yet invite scrutiny from regulators, and may run afoul of other health law requirements.

    John Owens, a broker for the Lewer Agency in Kansas City, Mo., said a large Midwestern convenience store chain is considering signing up for such a policy and is awaiting guidance from regulators.

    "What I'm telling people is, this may work, but you better have a plan B," said Andrew Ky Haynes, a Kansas City, Mo.-based benefits lawyer.
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    Re: Health Law Costs: Employers Eye Bare-Bones Plans - WSJ.com

    When healthcare cost was already a big issue for business, designing a system that increases those costs shouldn't have resulted in a shock that businesses are sent scrambling. I assume that the creators of this system have never really worked in a business environment. Regardless, going to basic UHC will be the end result anyway which is not something I am 100% opposed to depending on the details.

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    Re: Health Law Costs: Employers Eye Bare-Bones Plans - WSJ.com

    We've already made a significant cut in our workforce in preparation for the coming costs, and about to turn another 8 percent of our workforce from full time employment to part time. Taking our HR services overseas, too.

    Obama has zero comprehension of what it is to run a business, nor do his ignornant, needy constituents. Profits don't make themselves, and investors don't keep investing against their better judgment; there isn't a seemingly endless flow of free money from taxes without accountability, as there is in government.

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    Health Law Costs: Employers Eye Bare-Bones Plans - WSJ.com

    "We need to pass it to see what is in it."

    We need to freaking repeal this garbage. I remember a doctor friend of mine who was yacking on about this bill...last visit I had at his office he was talking about how bad it is. Obama backing aint as safe as it seems.
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    Re: Health Law Costs: Employers Eye Bare-Bones Plans - WSJ.com

    there are going to be a number of worthless safe auto-type plans until we give up on our failing system and replace it with UHC.

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    Re: Health Law Costs: Employers Eye Bare-Bones Plans - WSJ.com

    Quote Originally Posted by Helix View Post
    there are going to be a number of worthless safe auto-type plans until we give up on our failing system and replace it with UHC.
    Yes, and then there will no longer be a number of those worthless, 'safe auto'-type plans, but one universal, worthless, 'safe auto'-type plan.

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    Health Law Costs: Employers Eye Bare-Bones Plans - WSJ.com

    Double post
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    Health Law Costs: Employers Eye Bare-Bones Plans - WSJ.com

    Quote Originally Posted by Helix View Post
    there are going to be a number of worthless safe auto-type plans until we give up on our failing system and replace it with UHC.
    So how do you fund universal health care for 310 million people?
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    Re: Health Law Costs: Employers Eye Bare-Bones Plans - WSJ.com

    Quote Originally Posted by stonewall50 View Post
    So how do you fund universal health care for 310 million people?
    First, you look at what other nations have done, and note that they all pay less, every single one. Then, you look at the free market, and see if we can do even better than those other nations that are paying half of what we do. The answer is yes, we can. What we need is a universal health care that is really an insurance plan, not a pre paid health care.

    Most importantly, we need to get the burden of health care off of the shoulders of the employers, give the patients an incentive to shop around and to limit their own costs, while at the same time ensuring that, should someone suffer a serious illness or accident, the he/she can afford to be treated. That's an insurance program, like the fire insurance on a house, or auto insurance.
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    Re: Health Law Costs: Employers Eye Bare-Bones Plans - WSJ.com

    Quote Originally Posted by wbcoleman View Post
    This is just one more example of the built-to-fail nature of Obamacare. I've boldfaced the key sentence, in which one of the drafters of the scheme cheerfully admits that it never occurred to him that employers might "do what they have to do" in order to avoid the penalties attached to the employer mandate. The people behind this abomination were both stupid and arrogant, and they have saddled the nation with a wrecked system for financing and obtaining healthcare.

    Health Law Costs: Employers Eye Bare-Bones Plans - WSJ.com

    Employers are increasingly recognizing they may be able to avoid certain penalties under the federal health law by offering very limited plans that can lack key benefits such as hospital coverage.

    Benefits advisers and insurance brokers—bucking a commonly held expectation that the law would broadly enrich benefits—are pitching these low-benefit plans around the country. They cover minimal requirements such as preventive services, but often little more. Some of the plans wouldn't cover surgery, X-rays or prenatal care at all. Others will be paired with limited packages to cover additional services, for instance, $100 a day for a hospital visit.

    Federal officials say this type of plan, in concept, would appear to qualify as acceptable minimum coverage under the law, and let most employers avoid an across-the-workforce $2,000-per-worker penalty for firms that offer nothing. Employers could still face other penalties they anticipate would be far less costly.

    It is unclear how many employers will adopt the strategy, but a handful of companies have signed on and an industry is sprouting around the tactic. More than a dozen brokers and benefit-administrators in 10 states said they were discussing the strategy with their clients.

    "There had to be a way out" of the penalty for employers with low-wage workers, said Todd Dorton, a consultant and broker for Gallagher Benefit Services Inc., a unit of Arthur J. Gallagher AJG -0.07% & Co., who has enrolled several employers in the limited plans.

    Pan-American Life Insurance Group Inc. has promoted a package including bare-bones plans, according to brokers in California, Kansas and other states and company documents. Carlo Mulvenna, an executive at New Orleans-based Pan-American, confirmed the firm is developing these types of products, and said it would adjust them as regulators clarify the law.

    The idea that such plans would be allowable under the law has emerged only recently. Some benefits advisers still feel they could face regulatory uncertainty. The law requires employers with 50 or more workers to offer coverage to their workers or pay a penalty. Many employers and benefits experts have understood the rules to require robust insurance, covering a list of "essential" benefits such as mental-health services and a high percentage of workers' overall costs. Many employers, particularly in low-wage industries, worry about whether they—or their workers—can afford it.

    But a close reading of the rules makes it clear that those mandates affect only plans sponsored by insurers that are sold to small businesses and individuals, federal officials confirm. That affects only about 30 million of the more than 160 million people with private insurance, including 19 million people covered by employers, according to a Citigroup Inc. C +1.66% report. Larger employers, generally with more than 50 workers, need cover only preventive services, without a lifetime or annual dollar-value limit, in order to avoid the across-the-workforce penalty.

    Such policies would generally cost far less to provide than paying the penalty or providing more comprehensive benefits, say benefit-services firms. Some low-benefit plans would cost employers between $40 and $100 monthly per employee, according to benefit firms' estimates.

    "For certain organizations, it may be an ideal solution to minimize the cost of opting out," said David Ellis, chief executive of Youngtown, Ariz.-based LifeStream Complete Senior Living, which employs about 350 workers, including low-wage housekeepers and kitchen staff. Mr. Ellis, who was recently pitched a low-benefit plan, said it is one option the firm may consider to lower costs and still comply with the law, he said.

    Administration officials confirmed in interviews that the skinny plans, in concept, would be sufficient to avoid the across-the-workforce penalty. Several expressed surprise that employers would consider the approach.

    "We wouldn't have anticipated that there'd be demand for these types of band-aid plans in 2014," said Robert Kocher, a former White House health adviser who helped shepherd the law. "Our expectation was that employers would offer high quality insurance." Part of the problem: lawmakers left vague the definition of employer-sponsored coverage, opening the door to unexpected interpretations, say people involved in drafting the law.

    The low-benefit plans are just one strategy companies are exploring. Major insurers, including UnitedHealth Group Inc., UNH +1.13% Aetna Inc. AET +0.86% and Humana Inc., HUM +1.39% are offering small companies a chance to renew yearlong contracts toward the end of 2013. Early renewals of plans, particularly for small employers with healthy workforces, could yield significant savings because plans typically don't need to comply with some health law provisions that could raise costs until their first renewal after Jan. 1, 2014.

    Insurers and health-benefits administrators are also offering small companies a chance to switch to self-insurance, a form of coverage traditionally used by bigger employers that will face fewer changes under the law. Employers are also considering limiting workers' hours to avoid the coverage requirements that apply only to full-time employees.

    "You're looking at ways to avoid being subject to the law," said Christopher F. Koller, health insurance commissioner of Rhode Island.

    Regulators worry that some of these strategies, if widely employed, could pose challenges to the new online health-insurance exchanges that are a centerpiece of the health law. Among employees offered low-benefit plans, sicker workers who need more coverage may be most likely to opt out of employer coverage and join the exchanges. That could drive up costs in the marketplaces.

    "The whole idea is to get healthy people in and not-so-healthy people in" the marketplaces, said Linda Sheppard, special counsel for the Kansas Insurance Department.

    Experts worried that plans lacking hospital or other major benefits could leave workers vulnerable to major accidents and illnesses. "A plan that just covers some doctor visits and preventive care, I wouldn't say that's real health-insurance protection," said Karen Pollitz, a senior fellow at the Kaiser Family Foundation and former federal health official.

    Officials at the Department of Health and Human Services said they haven't seen widespread evidence of such strategies. They said the health law would bring new options, including the subsidized exchange plans, to low-income workers, and that most employers who offer coverage now choose to provide much more robust benefits.

    "Any activities that take place on the margins by a small number of employers would not have a significant impact on the small group or the individual market," said Mike Hash, director of the department's Office of Health Reform.

    Limited plans may not appeal to all workers, and while employers would avoid the broader $2,000-per-worker penalty for all employees not offered coverage, they could still face a $3,000 individual fee for any employee who opts out and gets a subsidized policy on the exchanges.

    But the approach could appeal to companies with a lot of low-wage workers such as retailers and restaurant operators, who are willing to bet that those fees would add up slowly because even with subsidies, many workers won't want to pay the cost of the richer exchange coverage.

    A full-time worker earning $9 an hour would have to pay as much as $70 a month for a midlevel exchange plan, even with the subsidies, according to Kaiser. At $12 an hour, the workers' share of the premium would rise to as much as $140 a month.

    Firms now offering low-cost policies known as mini-meds, generally plans that cap benefits at low levels, could favor the tactic. Companies sought federal health department waivers to cover nearly four million with mini-meds and other similar plans, which will be barred next year. Some employers are "thinking of this as a replacement for the mini-med plan," said Tracy Watts, national leader for health-care reform at Mercer, a consulting unit of Marsh & McLennan Cos. MMC +0.74%

    San Antonio-based Bill Miller Bar-B-Q, a 4,200-worker chain, will replace its own mini-med with a new, skinny plan in July and will aim to price the plan at less than $50 a month, about the same as the current policy, said Barbara Newman, the chain's controller. The new plan will have no dollar limits on benefits, but will cover only preventive services, six annual doctors' visits and generic drugs. X-rays and tests at a local urgent care chain will also be covered. It wouldn't cover surgeries or hospital stays.

    Because the coverage is limited, workers who need richer benefits can still go to the exchanges, where plans would likely be cheaper than a more robust plan Bill Miller has historically offered to management and that costs more than $200 per month. The chain plans to pay the $3,000 penalty for each worker who gets an exchange-plan subsidy.

    But, "those are going to be the people who will be ill and need a more robust plan," and insuring them directly could cost even more, Ms. Newman said.

    Many more workers, she expects, will continue to go without insurance, despite the exchanges and the limited plan. Currently, only one-quarter of workers eligible for the mini-med plan take it. Ms. Newman said, "We really feel like the people who are not taking it now will not take it then."

    Tex-Mex restaurant chain El Fenix also said it would offer limited plans to its 1,200 workers, covering doctors visits, preventive care and drugs, but not hospital stays or surgery. "What our goal was all along was to make [offering coverage] financially palatable for the company as a whole, so we didn't do damage and have to let people go or slow down our growth," said Brian Livingston, chief financial officer of Dallas-based Firebird Restaurant Group LLC, owner of El Fenix.

    Some benefits advisers worry that since the idea of the low-benefit plans is so new, they could yet invite scrutiny from regulators, and may run afoul of other health law requirements.

    John Owens, a broker for the Lewer Agency in Kansas City, Mo., said a large Midwestern convenience store chain is considering signing up for such a policy and is awaiting guidance from regulators.

    "What I'm telling people is, this may work, but you better have a plan B," said Andrew Ky Haynes, a Kansas City, Mo.-based benefits lawyer.
    It doesn't matter. The House is in the process of repealing Obamacare. I don't know if the repeal will make it through senate presently (it may but I'm not holding my breath) however, this certainly will be a major issue come the midterm senate race, and despite what the progressive sheeple say - the strong majority are against Obamacare - even many democrats.

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