Since election day, the future of healthcare in the US has been unpredictable, to say the least. More aptly, the healthcare industry is in a state of chaotic uncertainty with many unanswerable questions, and a lack of clarity and real solutions from the new administration (save a repeated promise to repeal the ACA – without any solid plans for a replacement).
However, there are inklings of what the new presidential team will emphasize as it tries to right the seemingly flailing ship of consumer health coverage. Specific to employers and almost regardless of how things shake out, the debate will still reign over how much ethical and financial responsibility an organization has towards keeping its staff healthy. Below is a brief summary of some of the bigger questions around the future of healthcare as it pertains to employers.
- Health Savings Accounts (HSAs): While HSAs are a great plan for employers to curb costs, analyst and employer data shows that because HSAs are tied to high deductible health plans (HDHPs) consumers pay the price in much higher out-of-pocket expenses. This is especially true for lower and middle class Americans who don’t have the same “disposable” income as the wealthy to put into these accounts. And although there are tax advantages to HSAs – namely that contributions are tax-free – it doesn’t change the fact that with HSAs, employees are bearing most of the cost-sharing responsibility. The idea with HDHPs and HSAs is that employees will be more knowledgeable about healthcare costs, shop around for the best deals, and in general make smarter decisions about their care. But research shows that despite the rise of HDHPs and savings accounts in the past few years, consumers are not researching costs as expected. In addition, studies on price transparency also show that it is not as effective as many hoped it would be, in part because of consumer perception that prices don’t vary that much and that higher prices mean better quality.
- Employer mandate: While the ACA’s employer mandate has gotten a lot of press over the years, the truth is that repealing the mandate may not make a huge difference. Many employers say that even if the mandate is repealed, they will continue to offer health insurance – partially for recruitment and retention needs, but also because “employees insist on it.” However, removing the mandate will loosen the pressure around compliance and potential penalties, and allow companies that hover around 50 employees to make hiring decisions based on need and not panic over the mandate. That said, the new administration has not shared many specifics on how exactly to curb ever-increasing healthcare costs, including out-of-pocket expenses which are having a significant impact on America’s middle class. Without a strong plan-of-action that positively affects employers and employees, offering employer-sponsored healthcare can still be a financial challenge for many organizations, especially nonprofits.
- Rollback of tax benefit: Paul Ryan and Tom Price, Trump’s pick for Secretary of Health and Human Services, have plans to partially roll-back the tax break organizations and employees receive for healthcare – namely using pre-tax funds to cover employee premiums. And while economists agree that the tax break is regressive, there is a still the very real potential that it will force “companies and workers to choose less generous coverage, reducing consumption of healthcare services, and raising federal tax revenue as companies boost taxable wages to make up for the lower benefits.” Taxing healthcare might help boost stagnant wages, but ultimately those costs will have to come from somewhere – and more than likely, the heaviest impact will be on employees.
- Crossing state lines: Proponents of this idea say that allowing insurers to cross state lines and only be responsible for their “home” state’s regulations would “encourage competition, boost consumer choice, and help contain ever-escalating health care costs.” But the reality is that many insurers would simply move their headquarters to the state’s with the least restrictions, lowering the value of consumer care and moving jobs out of many states – or forcing states with stricter laws to loosen their regulations. John M. Huff, president of the association and director of Missouri’s insurance department aptly calls it “a race to the bottom” and Joseph Antos, a health policy expert at the American Enterprise Institute say “allowing interstate insurance sales won’t do much to solve the health care cost problem.”
- Repeal of specific provisions: While some provisions will likely stay (e.g. no denial of coverage pre-existing conditions and dependent coverage up to age 26), there is tremendous uncertainty over provisions such as preventative care, lifetime limits and maximum out-of-pocket limits. Preventative care especially has been of big concern, with many questioning whether the new administration will take away necessary and cost-free care.
However healthcare shakes out in the months and years to come, one thing is for sure: most employers with 50+ employees will want – or need – to offer employer-sponsored healthcare in some form in order to remain competitive. This includes nonprofits, which often struggle more than for-profits to provide compensation packages valuable enough to entice talented staff. But with the rise of HSAs, the potential repeal of the employer mandate, and a possible roll-back of tax benefits, employees are likely on the losing end of the stick.
That said, there is a strong and viable healthcare solution for organizations that want to offer high-quality, affordable care for employees without breaking their own banks. The Nonstop Wellness approach to partial self-insurance allows organizations to eliminate employee out-of-pocket expenses, offer platinum-level benefits at a lower premium cost, and provide customized services. In addition, nonprofits can boost their operating budget through the return of unspent reserve funds. Regardless of what is coming down the pike, Nonstop Wellness and its myriad of advantages remains a constant.
Change may be inevitable but your organization doesn’t have to live in the uncertainty of it all. Download our comprehensive guide to ACA penalties for 2016 (which are still in effect until further notice) to help keep your organization in compliance:
