Employer tactics designed to better manage their health care costs are grinding them so finely that they continue to elicit new "guidelines" from the Obama administration.
Kaiser Health News offered the latest example of that trend when it looked at new guidance that focused on employers who attempt to offload employees with costly illnesses to the public exchanges.
Kaiser said there've been some instances of employers offering to pay employees who have costly diseases to leave the company plan and obtain coverage on the exchanges. Employers say they'll pay the employees' premiums if these employees agree to obtain exchange insurance.
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There's nothing in such a transaction that violates the Patient Protection and Affordable Care Act. But the very concept upsets PPACA supporters who, Kaiser Health News said, say it will undermine employer-sponsored health coverage and drive up the cost of public exchange coverage.
What to do? The administration brought together three departments—Labor, Health and Human Services and Treasury to plug the loophole temporarily. One way to declare the strategy illegal is to view it as "charging" high-risk employees extra for coverage. According to the bulletin issued by the feds, if an employer sets a premium at $2,500 per employee for coverage, and then dangles $10,000 before the high-risk worker to entice them to take public coverage, that employee's effective premium is $12,500—and that's discriminatory, the bulletin says.
Then there's the matter of discrimination based on medical condition, which the act doesn't permit. Says the bulletin:
"In the Departments' view, providing cash as an alternative to health coverage for individuals with adverse health factors is an eligibility rule that discourages participation in the group health plan. This type of arrangement differentiates based on a health factor and is outside the scope of the Departments' regulations on benign discrimination, which permit only discrimination that helps individuals with adverse health factors to participate in the health coverage being offered to other plan participants."
Admittedly, the bulletin indicates, this is an area that needs to be further clarified. No worries—the defenders of the act are hard at it. "The Departments intend to initiate rulemaking in the near future to clarify the scope of the benign discrimination provisions."
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Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
