Questions aplenty surround health care legislation

Local health care consultant Steve Hyde said he’s been a busy man lately.

“The bill, as much as I hate it, has been terrific for business,” Hyde said. “I’m getting a lot more calls.”

At Memorial Health System, government relations director John Suits finds 10 to 15 advisories on health care reform in his inbox every morning.

“It’s what I live and breathe right now and will for several years,” he said.

A seminar hosted earlier this month at the Antlers Hilton by Colorado Springs benefits management firm Benefits Resources was standing-room only.

“It’s a constantly changing law,” said Jeff Ahrendsen, vice president of Benefit Resources. “You have a lot of people who are curious about this.”

For people who aren’t health care experts, the good news is that the bill is backloaded, with the biggest changes coming in 2013 and 2014.

“This isn’t an event, it’s a process,” said Greg Papineau, a director at the Colorado Springs accounting firm BiggsKofford. “The changes go all the way through 2018.”

The bad news, the experts say, is there are considerations and consequences coming that businesses need to start thinking about now.

“There are some things you must pay attention to,” Ahrendsen said. “As the year goes on, there are more and more things people will have to take a look at.”

Beginning later this year, parents can keep their dependent adult children on their insurance until the child is 26, and insurance companies won’t be able to drop patients except for fraud. Businesses, however, will no longer be able to offer different health care plans to different classes of employees — if a restaurant offers its managers health insurance, for instance, it would also have to offer insurance to full-time waiters and busboys.

As for taxes, the only change in the first year is a 10 percent tax on indoor tanning.

“If you’ll be hitting the tanning salon to get ready for that trip to the Caribbean, do it before June,” Papineau joked.

After this year, however, the reforms increase in number and scope (see box below). For many businesses, the major challenge will be compliance, Papineau said. In 2011, for instance, the value of employees’ health benefits will have to be reported on W-2 forms.

“The information is not going to fall out of the sky,” he said. We’re going to have to go out and collect it.

“What I see is more compliance, more reporting you’re going to have to do. It’s going to take everybody a lot more time.”

Of course, there are also tax increases in the bill — some $400 billion of them, many in the form of Medicare surcharges on high-income earners. And for doctors and hospitals, there are reimbursement cuts. At Memorial, Suits said a quarter-point reduction in something called the Medicare market basket adjustment will cost the hospital about $2.3 million over the next year.

“That’s big money when you do as much Medicare as Memorial does,” Suits said.

The heavy hitters of the bill — the individual mandate to buy insurance and the individual insurance exchanges to sell it — come in 2014.

What happens after that is a subject of some debate.

Last year, Hyde wrote “Cured!” which laid out a market-based vision for health care reform. What actually passed, he said, is more likely to accelerate the growth of health care costs and undermine the employer-provided health care model that provides benefits to most Americans.

“If you’re an employer that’s still in business in 2014, your best bet will be to drop employee health care altogether” and pay the $2,000 per-employee penalty, he said. “It’ll be worth it just to get rid of the onerous reporting requirements.”

On the other hand, Margaret Sabin, president and CEO of Penrose-St. Francis Health Services in Colorado Springs, said many of the reforms in the bill were necessary and would have happened anyway.

“We had a system that was falling apart at the seams,” Sabin said. “I think we’ve given health care reform a lot of bogeyman things it doesn’t have. It’s going to be OK.”

Another fear is that reform is going to drive independent doctors out of business or into the arms of hospitals or large clinics. Dr. Brian Olivier, president-elect of the El Paso County Medical Society, said if they want to preserve independence, local doctors will, ironically, need to band together to set up electronic records and collect data to prove their effectiveness at delivering both cost savings and care the way big organizations can.

“I’m hoping doctors can get together to figure out some sort of multispecialty clinic without walls,” he said.

For hospitals, the idea that more people coming into the emergency room will have insurance sounds pretty good. If primary care physicians won’t accept those new patients, however, emergency rooms could be flooded because people have nowhere else to go and that insurance may not cover hospitals’ costs, Memorial’s Suits said.

“Our fear is that our emergency room utilization could increase dramatically,” he said.

The answer for hospitals, Suits said, is the same as it is for individual physicians: Combine forces to contain costs and improve efficiency.

“I think scale is a critical piece. The only reason you have scale is to absorb loss,” he said. “There’s inefficiencies in the system and we’re going to have squeeze them out,” he said.”

HEALTH OVERHAUL TIMELINE

When major provisions of the Patient Protection and Affordable Care Act take effect:

Sept. 23

• Children can stay on their parents’ health plans until they turn 26 (effective June 1 for many insurers).

• Insurers can no longer discriminate based on pre-existing conditions for children.

• Co-payments for basic care and medical screenings go away.

• Insurers can’t drop people who get sick.

• Tax credits for small employers for providing health care.

2011

• Insurers will have to spend 85 percent of premiums (80 percent for small plans) on health care.

• Businesses have to include the cost of health care benefits on employees’ W-2s.

• Over-the-counter drugs can no longer be paid for from health spending accounts.

• Employees will be automatically enrolled in a public long-term-care insurance program, unless they opt out.

2013

• Additional 0.9 percent in Medicare taxes for people earning more than $200,000 ($250,000 for couples).

• 3.8 percent tax on investment income for people earning more than $200,000 ($250,000 for couples).

• Contributions to flexible spending accounts capped at $2,500.

2014

• All U.S. citizens are required to buy a qualifying health insurance plan or pay a penalty.

• Employers with 50 or more employees are required to provide health insurance or pay a penalty.

• New state-based insurance exchanges where individuals and small employers can buy insurance.

• Tax credits to purchase health care for individuals or families earning up to four times the federal poverty line.

• No exclusions for pre-existing conditions.

2018

• 40 percent tax on “Cadillac” health care plans.