Healthcare Funding Proposals That Could Impact Your CompanyNearly half a dozen plans have been introduced or are expected — none with the broad support needed to get through Congress and win over the public. There are many proposals being floated to replace The Affordable Care Act (Obamacare.) However, each has its own set of difficulties, most revolving around how to pay for it.
One recent proposal to pay for a new health plan would be to cap the amount of employer-provided health benefits that can be shielded from an employee’s income and payroll taxes. The 2016 tax exclusion for health benefits is about $266 billion, and a cap would increase revenue by a portion of that amount, depending on the cap level. There are many who are not sure they want to go this route so it is only a proposal at this point.
There is also a proposal to change the system to be centered on refundable, age-adjusted tax credits for the individual market, allowing them to retain to freedom to buy a plan that’s right for them.
This is similar to the Cadillac tax which is to be levied on the value of the plan and would raise revenue by $2 billion in 2020 and $20 billion in 2025. Originally to be implemented in 2018, this was delayed due to continued heavy resistance from employer and unions.
There are also concerns as to the viability of government exchanges for purchase of individual insurance with the announcement that Humana is pulling out of government exchanges. They reported losses of $45 million on ACA business this last year. In addition, many other carriers are also considering leaving the market due to losses and proposed changes, which would leave individuals no or few carrier options in their marketplace.
Continued financial losses also lead to higher premium rates for those purchasing insurance. Many healthy, younger people may not continue their coverage. The number of uninsured people is lower than before the ACA due to tax credits, government subsidies and premium adjustments for income. And the Government Individual Marketplace reported about the same number enrolling for insurance coverage in 2017 as in 2016.
A Federal judge in U S court of Federal Claims recently ruled that the US Government must pay more than $200 million to an Oregon insurer, Moda Healthplan, that was owed under the ACA to cover insurers financial shortfalls due to high risk claims. These were to be covered under the high-risk pool, but the pool has not collected sufficient funds to cover the shortfalls.
In 2014 Congress voted to not allow any reimbursement beyond what was collected in the high-risk pool. Insurers are owed roughly $8 billion that the federal government did not pay, according to Centers for Medicare and Medicaid Services, and this could be an additional liability for the current administration.
There are many opportunities to improve what we have but there is no easy or right answer for everyone. Stay tuned for more updates as this progresses to see how it may impact you!Mercer PeoplePro Can HelpHave questions about how this may impact your organization? Mercer PeoplePro can provide advice and help you up-to-date. For more information, please contact me at Barbara.Jessen@mercerpeoplepro.com, or set up a FREE two-hour consultation by contacting us at MercerPeoplePro.com — help is only a click away.
