Jody Hall, a cupcake baker, today told lawmakers that she thinks the Patient Protection and Affordable Care Act (PPACA) minimum medical loss ratio (MLR) requirements are already helping to hold her health insurance coverage prices down.
Ed Fensholt, a compliance specialist at Lockton Companies L.L.C., Kansas City, Mo., said his firm believes that PPACA requirements already are increasing the typical client's health coverage costs about 2% to 3% and adding $1 per employee in health plan tax costs.
In 2014, when more PPACA taxes are set to take effect, the PPACA taxes alone could increase costs $10 to $15 per employee, Fensholt said.
The witnesses appeared at a hearing on health care costs organized by the House Education and the Workforce health subcommittee.
Rep. Phil Roe, R-Tenn., the chairman of the subcommittee -- a critic of PPACA -- said the country should do more to help employers control costs by changing the rules that government health savings accounts (HSAs) and flexible spending accounts (FSAs).
PPACA has imposed a $2,500 annual cap on FSA contributions and restricted holders of HSAs and FSAs from using account funds to buy over-the-counter drugs without a prescription, Roe said.
When implementing PPACA minimum plan value rules, the Obama administration may be preparing to value employer and worker HSA contributions in a way that would discoverage employers from offering HSAs, Roe said.
"However, even though more than 12,000 pages of rules and regulations have been written, there are still many unanswered questions surrounding the law that make it virtually impossible for any employer – large or small – to plan for the future," Roe said.
Roe said that, so far, no one knows how the Obama administration will define the "essential health benefits" package required by PPACA. He said the administration has made qualifying for "grandfathered status" -- a status that lets plans avoid complying with some PPACA requirements -- too difficult, and he contended that the administrative cost of using a new PPACA small business health insurance tax credit has been too high for small businesses to use the credit.
Fensholt said Lockton, a large insurance brokerage firm, has no quarrel with the goal of PPACA.
Lockton also respects the officials at the U.S. Department of Health and Human Services, the Internal Revenue Service and the U.S. Labor Department who have been implementing PPACA, Fensholt said.
"It’s clear that federal regulators are making a strong effort to listen to the employer community, to understand the concerns of employers, and to endeavor to balance the needs of employers with the needs of those individuals the PPACA was intended to benefit," Fensholt said.
But new requirements that have already taken effect, such as requirements that employers expand access to dependent coverage to children up to age 26, already are having a measurable effect on costs, Fensholt said.
A group health anti-discrimination rule that is supposed to be in effect could already have been forcing some employers, such as restaurant chains, to drop group health benefits altogether, because of the high cost of providing the same health benefits for large numbers of hourly employees as well corporate employees, Fensholt said.
The antidiscrimination rule has not yet had that effect mainly because agencies have not released the guidance employers need to try to implement it, Fensholt said.
Fensholt said Lockton believes new coverage requirements to take effect in 2014 will be quite expensive.
One rule would require employers to reduce coverage waiting periods for new employees to 90 days.
The rule could increase costs 4% for employers that now have a 6-month waiting period, and 25% for employers that now have a 12-month waiting period, Fensholt said.
PPACA excise taxes on health insurance, drugs and medical devices could add 2% to 3% to the cost of coverage in 2014, and plans already are paying a new $1-per-employee PPACA tax to fund medical treatment effectiveness research, Fensholt said.
Group health plans have been having to meet 50 separate notice requirements, and PPACA appears to be on track to add a total of about a dozen requirements, Fensholt said.
But Hall, owner of Cupcake Royale & Verite Coffee, Seattle, said she thinks the new PPACA MLR requirements -- which require insurers to spend at least 80% of small group revenue on health care or quality improvement efforts or else pay rebates -- have helped keep her group health rate increase low this year.
Hall, who employs 72 people, said she likes PPACA provisions that would require many large and midsize employers to provide benefits or else pay penalties.
"As a business owner who’s doing the right thing and offering health coverage to my workers, the real problem for me is that when other businesses my size (and bigger) don’t offer health care, I’m forced to subsidize their health care costs," Hall said. "The shifting of uncompensated health care costs to businesses that pay for health insurance costs my business hundreds of dollars per employee per year. How is that fair?"