Universal Health Care Coverage: Employer Perspective David Harlow JD MPH THE HARLOW GROUP LLC Presented at: Business Lawyers Network

Universal Health Care Coverage: Employer Perspective

David Harlow JD MPHTHE HARLOW GROUP LLC

www.harlowgroup.netPresented at: Business Lawyers Network

www.lexpertise.comSeptember 20, 2007

2 THE HARLOW GROUP LLC

MA Universal Health Care Law

Goals Preserve Federal dollars under Medicaid “1115” waiver Cover 95% of the 550,000 residents of MA without

health care coverage (as of September, nearly 200,000 newly insured folks)

Methods Free insurance replacing free care for the needy Sticks and carrots for employers Carrots for insurers


Elements of Law (1 of 3)

Redeploy public funds to more effectively cover low-income populations

Promote individual responsibility by requiring that everyone who can afford health insurance must buy it

Commonwealth Health Insurance Connector will connect individuals with affordable, “certified” health insurance products



Merger of non-group and small-group markets in July 2007 24% reduction in non-group premiums predicted (hasn’t

happened)

HMOs may offer plans linked to health savings accounts (HSAs)Young adults May stay longer on parents’ plan (2 years after loss of

dependent status or age 25, whichever comes first) 19-26-year-olds may purchase lower-cost, specially-

designed products



Moratorium on adding new mandated benefits through 2008

Subsidized plans for residents in need Expanded MassHealth (Medicaid) programs Details beyond scope of this presentation


Individual mandate (1 of 3)

July 1, 2007: All residents of MA must obtain healthcare coverage if it is affordable (defined in DHCFP regulations; calculator provided on Connector website) Example: Boston couple over 50 with $80,000 annual

income is exempt. Amount they can “afford” is $500/mo. Predicted minimum premium cost: $570/mo.

Mandate is intended to stabilize risk pools by including the super-healthy and super-unhealthy



Some of the money spent on “free care” in hospitals in past years will pay for insurance premiums for residents eligible for free care

MA residents will have to confirm on their state tax returns, beginning with 2007 returns (filed in 2008), that they have health insurance coverage. This will be verified against a database of health insurance coverage for all individuals



This requirement will be enforced with financial penalties for noncompliance: Tax year 2007: Loss of personal exemption

(value: >$200) Subsequent years: 50% of premium for health

insurance for each month without health insurance


Employer responsibility (1 of 3)

Fair Share Contribution: Every employer with more than 10 FTE employees must either Provide health insurance for employees and

make “fair and reasonable” contribution to its cost (defined in next slide)

OR, if it does not, Pay a “fair share” contribution of $295 per

employee



“Fair and reasonable” contribution means At least 25% of full-time (35 hrs./wk.)

employees participate in the employer’s health plan; or

The employer offers to pay at least 33% of the premium for all full-time employees employed at least 90 days during a base year period (Oct. 1, 2006-Sept. 30, 2007)



Fair share contribution represents a portion of the cost paid by the state for “free care” used by workers whose employers do not provide health insurance At present, a portion of health insurance premiums paid

by employers go to fund the free care pool It’s only fair to require a similar contribution from

employers who do not provide insurance benefits

Paperwork: HIRD forms To be collected from employees and retained 3 years Employer forms to be filed


Free rider surcharge (1 of 2)

Surcharge imposed on employers who do not provide insurance and whose employees use free care

Triggered if One employee receives free care more than

three times in one year, or A company has five or more instances of

employees receiving free care in one year


Free rider surcharge (2 of 2)

Surcharge to range from 10% to 100% (TBD by DHCFP) of state’s cost of free care provided, with the first $50K per employer exceptedRevamped free care pool Old: Uncompensated Care Pool paying a portion of

hospital charges New: Health Safety Net fund paying under standard fee

schedule for hospital services Over time, more people will have coverage, less free

care will be provided, and money in the pool will be redirected to fund subsidized health insurance


Cafeteria plans - mandatory

Mandatory offer of cafeteria plans (“Section 125” plans), effective July 1, 2007 (changed from original January 1, 2007 deadline), for employers with more than 10 FTE employees1,100 employers signed up by July 1Tax benefit: Employees’ premium expense will drop 28 to 48 percent

since they pay with pre-tax dollars. Employers who offer a pre-tax payroll deduction plan

also save 7.65 percent since their FICA contribution is reduced.


Health Care Quality and Cost Council

New state board to Set cost containment and quality improvement

goals for providers Host consumer-friendly website with provider-

specific cost and quality data


The Connector (1 of 3)

Will act as intermediary and administrator for the merged small group and non-group markets (employers with up to 50 employees)

Health plans will include the usual suspects, but at (supposedly) lower premium levels, plus some new choices . . .



High-deductible health plans coupled with HSAs, to be offered through cafeteria plans (HSAs may be sold by HMOs) Consistent with current federal priorities – emphasizing

individual responsibility and choice Favorable tax treatment of HSAs now mandated at state

level, and recently clarified at federal level Query: Will people use these plans appropriately, or

will they delay care (and then require more costly care) because they have to actually write the check?



“High Value” plans (aka restricted or tiered panel plans), available at lower cost Exception to “any willing provider” (AWP)

rule which requires health insurers to contract with all providers interested in doing so

Stripped-down plans for 19-26 year olds, offering first dollar coverage for PCP visits


Issues for employers

“Pay or Play”

Cafeteria plans

ERISA preemption?

Timing: Now! Enrollment in plans must be before December 31,

which means much is to be done by mid-October Cafeteria plans, employee enrollment, payroll deductions,

filing of plan documents and employee and employer information forms, etc.


On-line resources

Commonwealth Connector www.mahealthconnector.org

Health Care Quality and Cost Council www.mass.gov/?

pageID=hqcchomepage&L=1&L0=Home&sid=Ihqcc

A Healthy Blog (Health Care for All) www.blog.hcfama.org


Questions / Discussion

David Harlow JD MPH

THE HARLOW GROUP [email protected]

http://healthblawg.typepad.com617.965.9732

Documents

Universal Health Care Coverage: Employer Perspective David Harlow JD MPH THE HARLOW GROUP LLC Presented at: Business Lawyers Network