Jury still out on details of health care reform

March 26, 2010
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The dust is still settling in Grand Rapids after the health care reform bill’s passage into law in Washington, D.C.

Employers and their advisers are digesting and trying to interpret the 2,700-page Patient Protection and Affordable Care Act and the bill of alterations on which Congress was expected to vote prior to leaving for spring break over the weekend.

No way can insurance companies survive a new requirement to spend 85 percent of premiums on health care, compared to the 65 percent now, said David Smith, president and CEO of The Employers’ Association.

In the end, employers will pay more, predicted Robert Hughes, president of Advantage Benefits.

Faced with a pay-or-play scenario, some employers might just choose to pay fines and send their workers into the insurance exchanges because it’s cheaper than providing insurance, said Jamie Mills, president of Mills Benefit Group.

Despite facing Medicare rate cuts and an expansion of low-paying Medicaid patients, doctors still will see more insured patients, noted Dr. Gregory J. Forzley, a family practice doctor and medical director of informatics at Saint Mary’s Health Care. He chairs the Michigan State Medical Society board of directors and is president-elect of the Kent County Medical Society for 2011.

The biggest changes for Priority Health, the Grand Rapids-based health plan owned by Spectrum Health, are likely to be minimal until 2014, when most of the new provisions kick in, said Executive Director of Public Policy David Bilardello.

And at the Grand Rapids Chamber of Commerce, “Ambiguity is the bigger worry. Business needs certainty,” said Andrew Johnston, director of legislative affairs, who works with the Health Care & Human Resources Committee.

Michigan Attorney General Mike Cox, a Republican gubernatorial candidate, sued to try to upend the legislation. Gov. Jennifer Granholm, a Democratic lame duck, tried to stop him. The state’s insurance commissioner liked it.

Daniel Loepp, president and CEO of the state’s largest insurer, Blue Cross Blue Shield of Michigan, said, “There is much work to be done in the next few months and years as reforms phase in over time. We welcome the opportunity to compete on a more level playing field where other insurers will no longer be able to cherry pick the young and healthy.”

Hughes wondered if the playing field would be truly level if tax-paying, for-profit insurance companies are suddenly bound by guarantee issue, when competing with the nonprofit BSBSM, which for decades has paid no state tax in exchange for guarantee issue to Michigan citizens.

“I am concerned that this January (2011), there could be a huge increase in policy cost,” Smith said, adding he thinks those hikes could be as high as 30 percent to 40 percent.

Mills said she expects some employers will indeed choose to pay the penalty, and some may stop offering health insurance and let their workers turn to the exchanges instead.

“What CEO isn’t going to look at that: pay or play?” she asked. “Of the bigger companies I have talked to, most have said they will pay. The bigger issue is, if health care costs $500,000, and the government is only going to get $35,000, how do you provide care that used to cost $500,000?”

“For a business in Michigan, we’ve been dealing with a lot of uncertainty,” Johnston added. “You throw health care on top of that, and it’s not exactly the greatest environment for business.”

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