Benefits

The Affordable Care Act: Executives Take Note

By Staff Report

May. 13, 2013

Raise your hand if you’ve read the Affordable Care Act cover to cover.

I don’t see many hands raised, and neither is mine.

Regardless of whether you love it or hate it, there’s no way to avoid it. It’s coming, and it’s coming soon.

As the clock ticks toward 2014, it seems that there is more to the health care reform law than I realized. This article from Kaiser Health News talks about how executives won’t be able to get better health care benefits under the law than other employees. There’s an anti-discrimination provision in the act that could trigger up to a $500,000 fine for a company if a C-suiter, for instance, gets better or even free health benefits that others don’t, according to the article.

Call me naïve, but I didn’t even know this practice was going on. Why would people making six- or seven-figure salaries not be called upon to pay their fair share of health costs when the five-figure folks have to pony up?

As Jay Starkman, CEO of Engage PEO, a St. Petersburg, Florida, based HR advisory firm says in the article: Executives are unlikely to get any sympathy on this issue. “The right way to handle it is to have the same benefits for everyone.”

Well, yeah. While health care spending per capita has slowed down considerably from 8.8 percent in 2003 to about 3 percent from 2009 to 2011, many are predicting that trend to reverse itself next year. So how can companies complain about their health care costs going up if they aren’t even asking every person in the company to contribute? Would an executive really balk and threaten to leave a company if he or she had to pay for health care? If so, there are bigger issues at hand.

Don’t get me wrong. I have no problem offering executives perks to bring in the best talent, whether it’s stock options or health club memberships or use of a company jet or car, but health care just feels different. I understand boards make these decisions, but with CEOs, for instance, making 354 times as much as the average worker last year, it’s really hard to explain how giving them a pass on health benefit costs is justified.

To build a true team, companies need to offer a level playing field and avoid favoritism. As Ryan Kahn, a career coach, says in this Forbes article, “By not treating everyone equally, a manager is fostering a sense of resentment and separation that can de-motivate employees and damage team unity.”

So I am all in favor of having everyone in a company pay the same amount for comparable health coverage.

Health care insurance pioneer Michael M. Davis said it best in 1963 in his lecture titled “America Challenges Medicine”: “When the needs of society are considered, the insurance principle requires spreading the risk not merely within favored groups but among all groups.”

Companies have a lot to do to get ready for 2014, but they may want to give Davis’ speech a read—along with the Affordable Care Act—first.

James Tehrani is Workforce’s copy desk chief. Comment below or email editors@workforce.com. Follow Tehrani on Twitter at @WorkforceJames.

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