Whether you are for or against health care reform, here are a few sobering statistics. Between 1999 and 2009, employer-sponsored health insurance premiums rose 119 percent, while median family incomes climbed 29 percent.
In Rhode Island, health insurance premiums now represent 17 percent of median household income. If we don’t slow the cost curve, health insurance premiums are projected to rise from an average annual family cost of $12,298 to $23,842 by 2020. These trends are unsustainable.
Though the jury may be out for some time as to whether the Health Care Affordability Act will eventually slow the explosive growth in costs, there is no turning back. The time is now for everyone involved, from legislators to insurers, providers, employees and employers alike, to share the responsibility in ensuring the new measures have a chance to work. We can begin by focusing our attention on those components of this comprehensive package that are likely to drive both the immediate and long-range impacts on the local business community.
• Under current Rhode Island law, children over 19 must be at least a part-time student to be covered as a dependent. Starting this fall, children up to age 26 may be on their parents’ plan regardless of student status. James Moniz of Moniz Benefits Group favors this measure because “as a group, overall the young are a very good claims risk who often find it difficult to secure comprehensive coverage in alternative markets.”
• Starting in 2010, individuals and group health plans will be prohibited from placing lifetime limits on the dollar value of coverage. Presently both Blue Cross & Blue Shield of Rhode Island and Tufts Healthcare have no lifetime dollar limit on “in-network” benefits while United Health has a $5 million limit.
• Effective later this year, qualifying health plans will no longer require copays for certain preventive screenings, such as pediatric and adolescent preventive care, immunizations, and certain tests for women, such as Pap smears and mammography.
• For employers with 25 or fewer workers with average annual wages of less than $50,000, and for those firms that pay at least 50 percent of health insurance premiums, a tax credit of up to 35 percent of the employer’s contribution toward the premiums will be available beginning in 2010. A full tax credit will be available for companies with up to 10 employees with average annual wages of $25,000. Since most local firms employ fewer than 25, according to William Delmage of WD Associates, “this measure should help a number of companies struggling to maintain coverage.”
By 2014, employees and employers of all sizes will begin to feel the impact of federal reform as premium vouchers and cost-sharing subsidies start to kick in and the controversial individual and employer mandates begin to take effect.
• Similar to current Massachusetts law, starting in 2014, all U.S. citizens and legal residents will be required to have health insurance. Those without coverage will pay a tax penalty starting at $95 in 2014 and increasing to $695 by 2016.
• To alleviate the overall cost of purchasing the coverage, beginning in 2014, qualifying workers and their families will be eligible for two types of subsidies. The first comes in the form of a refundable premium credit, its size based on income limits, as well as cost-sharing subsidies for out-of-pocket expenses, also subject to income limits.
Insurers who participate in the Exchanges must provide four benefit categories of plans: Bronze (covers 60 percent of benefit costs), Silver (covers 70 percent), Gold (covers 80 percent) and Platinum (covers 90 percent). The law will allow each state considerable flexibility in determining how the Exchanges should be run.
• Starting in 2014, employers with more than 50 employees that do not offer coverage and have at least one full-time employee who receives a premium tax credit will be assessed a fee of $2,000 per full-time employee, excluding the first 30 employees from the assessment.
Additional aspects of the law focus on combating unhealthy lifestyles, with incentives available to employers to establish worksite wellness programs.
While many of these points are very specific, the legislation offers much opportunity for states to innovate. How Rhode Island is affected by national health care reform will rely on the preparation of our political leaders, the medical system, the insurance industry, and especially the business community. •
James J. Raiola is the vice president of the Rhode Island Business Healthcare Advisory Council.
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