ANALYSIS: HEALTH EXCHANGES PRESENT COMPLEX OPTIONS DROPPING EMPLOYEE COVERAGE MAY NOT REDUCE HEALTH CARE COSTS FOR MANY COMPANIES [Corrected 07/26/12]

By Twedt, Steve | Pittsburgh Post-Gazette (Pittsburgh, PA), July 20, 2012 | Go to article overview

ANALYSIS: HEALTH EXCHANGES PRESENT COMPLEX OPTIONS DROPPING EMPLOYEE COVERAGE MAY NOT REDUCE HEALTH CARE COSTS FOR MANY COMPANIES [Corrected 07/26/12]


Twedt, Steve, Pittsburgh Post-Gazette (Pittsburgh, PA)


When the health insurance exchange option arrives in 18 months, as required by the federal health care overhaul, some southwestern Pennsylvania employers might see it as an opportunity to drop their health care benefits.

After all, wouldn't life be simpler to just pay the fine mandated by the Affordable Care Act and let employees find health insurance through the exchange?

Simpler, yes.

Cheaper? Probably not -- and the cost may not come down to just dollars and cents.

A report by the Ann Arbor, Mich.-based firm Truven Health Analytics examined different approaches employers might take -- continuing an employee health benefit plan; dropping a plan and paying a fine under the health care law's "play or pay" provision; or dropping a plan while compensating employees for at least some of the cost of getting coverage through an exchange.

"Across the board," Truven analysts concluded, "there is no short- term or long-term advantage to employers dropping group health plans in favor of carrying fines."

That may dishearten employers who were thinking the Patient Protection and Affordable Care Act's health insurance exchanges were their ticket out of the expense and bother of administering a group health plan.

"I think there are a lot of people who say, 'If this is a viable option, we would love to get out of the health care business,'" said Jason Seltzer, president of Seltzer and Associates insurance brokers in Mt. Lebanon.

"I think there is a feeling among some small and mid-size businesses that the exchanges are a better way to go," added Lorin Lacy, principal for the health and productivity group at Buck Consultants.

The Truven analysis found otherwise.

"We couldn't find a win-win situation for both the employer and the employee," said Ray Fabius, chief medical officer for Truven. "In the end, the total cost of coverage goes up, and we believe it is considerable."

Many questions still surround the health exchanges, which are scheduled to go online in 2014, including what they will cover and how much they will cost. Many businesses are still sorting out their best strategy.

"Even the well-informed employer doesn't fully grasp the enormity of the decision because there are so many variables out there," said Mr. Seltzer.

But companies make decisions about benefits packages months or even a year ahead of time, so they don't have much time to decide now that the Supreme Court has ruled the Affordable Care Act constitutional. Enrollment in the exchanges is scheduled to start in July 2013. …

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ANALYSIS: HEALTH EXCHANGES PRESENT COMPLEX OPTIONS DROPPING EMPLOYEE COVERAGE MAY NOT REDUCE HEALTH CARE COSTS FOR MANY COMPANIES [Corrected 07/26/12]
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