HR Administration

Little Change for HR in Wake of Health Reform Hearings

By Rita Pyrillis

Apr. 2, 2012

As pundits and observers speculate on the fate of President Barack Obama’s health care law after last week’s arguments before the U.S. Supreme Court, it’s been business as usual for employers who are proceeding with their compliance efforts under the Patient Protection and Affordable Care Act.

“I’ve been advising clients since the beginning that the prudent course is to assume that an act of Congress will be upheld,” says Tom Christina, an attorney in the employee benefits practice of Ogletree Deakins in Greenville, South Carolina. “Pundits are saying that it looks like the individual mandate is dead but I would think that imprudent. It seems extremely likely that decision will stand.”

The justices heard arguments regarding what should happen to health care reform, which was passed in March 2010. At issue is the constitutionality of one of the law’s pivotal provisions, the individual mandate, which requires citizens to have health insurance. The high court is expected to reach a decision in June.

Tough questioning of attorneys representing the Obama administration by conservative justices have led some to predict that the court will repeal the mandate, but Andy Webber, president of the National Business Coalition on Health in Washington, D.C., cautions against jumping to any conclusions.

“I don’t think you can draw a lot of conclusions from the oral arguments,” Webber says. “Justices ask lots of questions from all sides to crystallize their thinking. I don’t think we should jump to the conclusion that they will strike down mandates just because there were a lot pointed questions asked. Most experts think that there’s a very good chance that it will be upheld.”

Employers are almost evenly split over whether the Supreme Court should repeal the law, but most do not want to see that happen, according to a recent survey of 437 employers conducted by the Midwest Business Group on Health and co-sponsored by the National Business Coalition on Health, Workforce Management and sister publication Business Insurance. The survey results were released March 26, the day justices began hearing testimony.

“I don’t think the employer community is a homogenous group,” he says. “There are differences of opinion as our survey reflects. There was some concern that the PPACA, with its threats of penalties and excise taxes, and the administrative burden of it, would cause a lot of employers to rethink staying in game. But there are lots of reasons for employers to stay in the game irrespective of the PPACA, like preferential tax treatment and the critical issue of attracting and retaining competitive talent.”

Under the law, employers with more than 50 full-time workers will have to pay a $2,000-per-employee fee for dropping health care coverage. While many employers have been analyzing the costs of continuing to offer health benefits against stopping and paying the penalty, most are staying in the game, according to John Lapinski of Buck Consultants in Chicago.

Employers “have absorbed all the things they needed to do for 2010, 2011 and 2012 and it wasn’t that overwhelming,” he says. “They’ve done a lot of modeling on pay or play, but that occurred 18 months ago and now they have moved on.”

Among provisions already in play is a requirement to allow young adults between up to age 26 to enroll as dependents on their parents’ employer-based health plans and a mandate to cover all preventative care services at 100 percent. Employers have also been participating in an early retiree reinsurance program that became effective in 2010 to encourage employers to continue offering health care benefits to early retirees. The program set aside $5 billion to reimburse employers for a portion of the costs of providing coverage.

And this year, employers are preparing for the law’s Summary of Benefits and Coverage requirement, which requires that all eligible employees receive a four-page summary of their benefits in time for the September enrollment season. Employers will also have to comply with W-2 reporting requirements on the cost of health insurance.

But the biggest changes lie ahead in 2014 when the key part of the reform law—the health insurance exchanges—takes effect. All states and territories must establish a health insurance exchange, or market where consumers and small businesses will be able to buy coverage from competing private plans, by Jan. 1, 2014.

Given the uncertain fate of health care reform, employers are “planning for lots of contingencies,” according to Steve Wojcik, vice president of public policy for the National Business Group on Health in Washington.

“With the Supreme Court review and the upcoming presidential election, everyone is dealing with a lot of uncertainty, so it’s good that we will have a clear cut and quick decision, whatever that may be.”

Rita Pyrillis is a writer based in the Chicago area.

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