Businesses face questions as health reform rolls out

After attending a health insurance conference in February, Larry Harrison’s reports to fellow brokers took on the trappings of an Abbott and Costello routine.

They would ask him about the overriding message from the presentations and Harrison, with the benefits firm National Healthcare Access Inc., would reply, “I don’t know.”

But certainly, they would continue, he took notes or received the program CDs. What theme emerged from them?

“I don’t know,” he would reiterate. “When the speakers looked at what was coming, they would say, ‘I don’t know.’”

As companies and their employees head into another open enrollment season starting Oct. 1, numerous health care blanks remain to be filled in as part of the Patient Protection and Affordable Care Act.

“There are more questions than answers and nobody has a crystal ball,” independent broker Leonard M. Barend Jr. said. “That’s the scary part. If anyone thinks they know where this will end up, they are mistaken.”

A number of insurance companies are willing to renew current policies until Nov. 1, 2014, with possible changes in premium. Barend advises companies to take this early renewal option as a grace period in the hopes that the landscape will come in to sharper focus over the next year.

“If I were a good businessman, I would take the extended policy if I could,” he said. “It may cost more, but you will have certainty until you see how this plays out.”

Otherwise, some features will take effect that could significantly alter the price and the terms of policies, notably community rating and the compression of the age bands.

Insurance companies have followed a longtime practice of drafting coverage terms based on companies’ employee rosters. As part of the process, they grouped people into age bands of five years each and looked at the medical claim history. But under the Affordable Care Act, the age bands have been reduced to four — younger-than-20, 20-39, 40-59 and older-than-60 —with the physical condition of the entire community being taken into account.

For example, said Frank Nolimal, a partner with Assurance Ltd., one of his clients is a tech company with a Las Vegas office of 10 people with an average age of 26. They now pay $160 each per month for coverage with a relatively low deductible of $500 because they are young and healthy.

But the new standards, he said, will jump their rates by 60 to 75 percent for next year, he said.

“There are no more preferred rates,” he said. “I have about 190 businesses as clients and half of them will see their premiums go up.”

Some businesses with older employees or weak health histories will do relatively well, reversing the trends in recent years for credit for things such as not smoking, regular checkups or going to a health club.

“There is no incentive anymore for wellness programs for a group of employees,” Harrison said.

Shrinking the ratio from the highest premium group to the lowest from 6-to-1 to 3-to-1 will add to the bill borne by the young and healthy and provide a break for older and less fit.

Nolimal breaks his business clients into three categories:

■ Those that need a strong health plan to recruit and retain professionals should continue with the status quo as much as possible

■ Those that have a number of employees paid around $10 or $12 an hour should drop their coverage and direct them to the state’s new insurance exchange, the Nevada Health Link

■ Those that should look closely at the small health option plans from the exchange.

However, Nolimal does not expect the option plans to work well because only a tiny percentage of companies will qualify for an available tax credit.

The exchange, set to go live Oct. 1, will market plans to individuals with potential federal subsidies. In Nevada, only health maintenance organizations will be available through this route from four groups: Sierra Health Plans, Anthem Blue Cross, St. Mary’s Health Plans and the Nevada Health Co-Op, an offshoot of the Culinary union. As a result, Harrison said, people who place great importance of having favorite doctors inside a network will likely lose out.

An individual earning less than $15,856 a year, or $32,499 for a family of four, will qualify for Medicaid and have to pay nothing for health care. Starting at those levels, the government premium subsidy will start at 93 percent for people who go through the exchange and drop in steps until reaching zero for individuals earning $44,680 or families of four at $92,200.

Nolimal preaches the virtues of the exchange to business owners because of the subsidies.

“You would be doing them a favor,” he said.

Companies could also give employees stipends to help pay for their coverage, he added.

Also, the Internal Revenue Service will have the power to enforce the employer mandates built into the law, another reason for companies to drop coverage.

“An employer does not need the IRS sniffing around the books just because of some health care issue,” Harrison said.

But brokers worry about a bumpy start to the exchange. The initial training sessions for insurance people will start Sept. 23, only a week before the policies become available. Some agents will have less time than that to get ready.

“I have the suspicion I will get there and they will start talking about technical problems,” Nolimal said.

Overall, business owners may face a period of flying blind.

“Clients look to me for answers,” Harrison said. “I look to the carriers. The carriers look to (the U.S. Department of) Health and Human Services. Then Health and Human Services says it hasn’t made any rulings.”

Contact reporter Tim O’Reiley at toreiley@reviewjournal.com or 702-387-5290.