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Even though the Republicans have “moved on” from Health Care Reform, small businesses need to expect changes to the Affordable Care Act.

If you recall, the American Health Care Act was just 1 of 3 “prongs” to the Republican’s overall health care strategy.  There are still significant actions that can be taken via Administrative Action (HHS and the IRS).  And additional legislation was always part 3 of the plan.

Below are some takeaways from what we’ve seen as “wants” form the Republicans and what we should expect moving forward.

 

What We Learned

Fewer Taxes and Requirements for Businesses

• Expect a repeal of the Individual Mandate and Employer Mandate
• Expect a push to repeal ACA Taxes:
  • Tanning Tax (10%)
  • Medical Device Taxes (2.3%)
  • Medicare Penalty Tax for $200K income (0.9%)
  • Cadillac Tax (40%)
  • Branded Rx Drugs ($4 billion in 2017)
  • Health Insurance Premium Tax (13.9 billion in 2017)
  • Net Investment Income Tax (3.8%)

Reduction of ACA Entitlements

• Medicaid Expansion / Individual Cost Sharing
  • (Premium assistance for people with incomes between 100% & 400% of the Federal Poverty Line)
• Small Business Tax Credit

Customizable benefits and more options

• Essential Health Benefits may go away
• Lots of talk of “choices”, “options”, and “State level decisions”

The Republicans Vision of where we should go

• High Risk Fund to help Uninsured and High Risk Individuals
• Penalties for going uninsured paid directly to insurance carriers when uninsured sign up, instead of taxed by the Federal Government while they are uninsured.
• Medical expenses should get pre-tax treatment via:
  • HSA & FSA benefits
  • Lower percentage of income to write off medical expenses (7.5% vs current 10%)
• Increase the “Spread” of premiums between least and most risky to insure

 

Expectations Moving Forward

 

1)  A “Big Compromise” with bipartisan support

The Republicans don’t have enough votes in the Senate to pass unilateral legislation.  Even if they did, it appears that they are so fractioned in the house that they can’t get anything done anyway.

Considering the ramifications of unilateral legislation in the passing of the ACA (Obamacare), this is a good thing!  My fear has always been that the Republicans would mess up their opportunity and the Democrats would use this as a reason to move to a Socialized program the next time they take office.  Bipartisan legislation would get the “Political Pendulum” back in the middle.

 

2)  Carriers will continue to get creative

We’re seeing more and more programs come from Carriers to help small groups being penalized by the ACA get out of these costly benefit programs.

Humana just released an association program for Commerce Lexington, Greater Louisville Inc., and the Northern Kentucky Chamber.  I’ll save my opinion on the differences in this program and one of Anthem’s associations to one-on-one discussions.

Additionally, there are dozens of options for “Level Funding” or “Alternative Funding” Programs.  These are great because they essentially work just as your pre-ACA plan worked and the carrier does some “finagling” on the back end that gets you out of the ACA.  Again, I’ll save my opinions of these programs for on-on-one discussions.

 

3)  Your premiums will continue to rise

At the macro level, Health insurance is nothing more than the financing of health care costs.  For every dollar we pay in premiums, the carriers pay our eighty cents in claims.  So, for every dollar we spend on medical care, we will pay insurance carriers $1.25 in premiums.

Until we have major changes in medical costs, insurance premiums will continue to rise.

 

Negotiating Tactic

False deadlines used to create a sense of urgency are an unprofessional “closing” sales tactic.  It wouldn’t surprise me if the whole “Today is the last day to vote” was just a negotiating tactic.  I’ll reserve my editorial on this for another time.

 

Final Thoughts

 

With premiums continually rising, and more and more carriers dropping out of “Obamacare” there is significant reason to re-evaluate health care in America.  If Washington comes up with a bipartisan approach we may have long-term regulatory stability for health insurance.

If you would like to talk in more detail about your specific situation, please feel free to email or call me.

 

Will@FreemanInsKY.com

LEX: (859)313-5129

LOU: (502)513-6090

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