Weary confusion

For Bill Schmidt, the cost and complexity of figuring out what to do under the ever-changing rules of the Affordable Care Act are driving some of his clients to look for the easy way out. “I hear this question a lot, especially from small employers. ‘What if I just give [my employees] cash?’ ”

The idea is that those workers then could buy health plans from one of the new insurance exchanges and potentially qualify for federal subsidies, too. It does sound easier than trying to create a company-backed plan.

Yet Schmidt, president and founder of Small Business Insurance Solutions in Potomac Falls in Loudoun County, says this option often is not the best choice. He usually can find plans for the same cost as a cash outlay, but “this year will probably be the most difficult. There are clients I have this year who are going to get a rate increase, no matter what.”

Their frustration is understandable. The Affordable Care Act already was complicated when it was signed into law four years ago. Now, the three dozen or so changes that have been made so far to the rules and the deadlines have made a kind of weary confusion for businesses and insurance plans alike. The devil nowadays is in the number of details.

Deadline delays
Late last year, for example, the administration extended the federal high-risk pool until March to give people more time to sign up, citing the technical problems with the healthcare.gov website that kept people from enrolling.

In February, the administration delayed provisions of the employer mandate for another year for medium-size employers, until 2016. That month it also decided to offer subsidies to those buying health insurance plans outside of the exchanges.

In late March, the administration announced it would give some enrollees a little more time, such as those who had begun their registration before the March 31 deadline but hadn’t completed it. 

Schmidt notes that the ACA still is not getting enough of the young and healthy enrollees that it needs. Many of them instead will pay the penalty, which is $95 in the first year.

From a financial standpoint, that’s understandable, because of how the ACA is structured in Virginia. For group rates the cost of the highest-priced plan can be no more than three times the cost of the lowest-priced plan, “and that brings the low rates up really high,” he says.

Small businesses that have offered health insurance are going to have a hard time bearing higher costs. “I’m sure I’ll lose some clients this year who will say, ‘I just can’t afford it’ and let employees go to the exchange,” Schmidt says.

Heads in the sand
The delays in the ACA have been described as accommodations for businesses that need more time to figure out what to do. Scott Moss, managing partner of accounting firm Cherry Bekaert’s advisory services practice, notes that extra time only helps if you use it. “Some businesses have used it to their advantage in fully vetting their options; others have maybe put their head in the sand and said, ‘I’ll deal with it when I absolutely have to.’ ”

That time is here, Moss says. “What we see right now is the next four or five months will be an all-out push for those companies that haven’t done any evaluation yet to really figure out what it all means,” he says. Choosing the best option and then implementing it takes time. “If you get too much into summer, you’re going to start running out of runway.”

Cherry Bekaert last year added a new benefits consulting service so it could answer the many questions from clients and potential clients. A small business might ask how to classify an employee under the ACA, for example.

Lately, Moss says, some big companies have called to get a second opinion. “Generally what we’ve seen is those companies that have been planning for it have actually been able to be somewhat aggressive in the marketplace and find out ways to make it a little more palatable cost structure,” he says.

Pricing problems
From the point of view of health plans, every change in the terms means tossing out the calculations developed to set pricing. “If you’re a health plan, your challenge is trying to make long-term planning decisions,” says Doug Gray, executive director of the Virginia Association of Health Plans. “When they change the criteria about who is going to be in that pool, that undermines some of your assumptions. So it is trying to have too many changes.”

A good example is the White House decision announced last November to let people keep their previous insurance plans for a longer period of time. That move followed weeks of intense criticism after it became clear that insurers were canceling plans that didn’t meet the terms of the ACA, breaking President Obama’s pledge that people could keep their existing plans if they wanted to.

That move and others “were completely unexpected” by the insurance industry, Gray says. “So trying to figure out how that would affect the marketplace is a challenge.” Plus, insurers faced a May 1 deadline this year for writing proposals for what products and rates they’ll offer next year, “which is hard to do,” he says.

Adding to the difficulty of getting the ACA launched is that many of the uninsured aren’t sure about the deadlines or say they won’t sign up. A Kaiser Health Tracking poll, conducted in mid-March, showed that only 39 percent were aware of the March 31 deadline. Fifty percent of those polled said they would remain insured.

Still, Gray is patient about the ACA’s implementation. “Nobody has made assumptions that during the first open-enrollment period we’re going to get everybody enrolled,” he says. “I don’t think it’s a one-year thing. It’s going to take several years of open enrollment periods. This is an enormous project.”

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