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HEALTH CARE QUARTERLY 8-B Long Beach Business Journal
March 4-17, 2014
Covered Health Care Reform Law California Will Likely Reduce Labor Supply, Suspends Online Not The Number Of Jobs Enrollment Portal ■ By T L. R , Editor For Small ome 2.5 million people over the next decade won’t feel obligated to stick with Businesses a full-time job simply for health benefits due to the federal health care subsidies ANALYSIS
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and expansion of Medicare under the Affordable Care Act (ACA). That’s the estimation from the Congressional Budget Office (CBO), which revised its numbers in a report released last month. The office originally estimated that approximately 800,000 people, many of whom are lower income, part-time workers, would choose to work less in order to qualify for federal assistance. And though there has been discussion about businesses cutting workers or reducing hours because of the ACA, individuals expected to cut back their work hours does not translate to a reduction in jobs. Michael Lanterman, president of Lanterman Insurance Agency, told the Business Journal that many of his clients looked at putting employees at part-time to get under 50 full-time equivalents, thus qualifying as a small business under the ACA and effectively avoiding the health care mandate. None of his clients have done that. “I still think that because of the federal subsidies, it’s going to increase demand for goods and services, and that’s going to increase demand [overall],” he said. So far, discussion of employees reducing their work hours isn’t as much of a topic with the white-collar industry – particularly those in the service field – as it is with the blue-collar industry. “I think it represents lower paid people in the service industries and front-line entry level,” Lanterman said. “I’ve seen it a couple times with some receptionists and a couple of working moms who ask to go part-time to qualify for the subsidy. . . . Most people can’t afford to work less.” Individuals working part-time or those with relatively low incomes to begin with, and are working another job to get health benefits, now have the opportunity to consider buying individual insurance through a health care insurance exchange and to take advantage of a subsidy. Individuals with income between 138 percent and 400 percent of the federal poverty level (between $16,104 to $46,680 in 2014) may qualify. Approximately 2.6 million people are eligible for federal health care subsidies in California and another 1.4 million Californians are now eligible for Medicaid (MediCal). “Subsidy funding under the ACA depends on the number of people who qualify for each, a number that, presumably, can go up or down,” Larry Hicks, spokesperson for Covered California, told the Business Journal in an e-mail. Eduardo Martinez, senior economist with Moody’s/Economy.com, explained to the Business Journal that there are many individuals close to retirement age who continue to work to avoid giving up employer-based benefits. “They can retire and start getting Medicare, or if they have a partner or spouse who is still working, they can get their health benefits,” Martinez said. “Or they can go to the exchange and get a subsidy there.” From an economist’s point of view, Martinez said the money employers pay to provide health insurance coverage to workers comes from what would otherwise be employee wages. “It’s essentially a tax on employees, who are exchanging less takehome pay for the benefit of employer-based health care. . . . If you had a health care system with a single-buyer or single-payer, and you had cost control with health care benefits, they would get more of their take-home pay,” he said. Grocery chain Trader Joe’s decided to no longer provide health insurance to employees who work fewer than 30 hours per week (the threshold for full-time employment under the ACA). Those employees are, more often than not, a combination of college students, individuals near retirement age or spouses of individuals who earn higher incomes and receive employer-based health coverage. “The vast number of those employees are better off going to the health insurance exchanges to qualify for subsidies and keep more take-home pay,” Martinez said. There is an argument that more jobs are being created as a result of the ACA. “The Affordable Care Act relies upon health plans to deliver health care coverage and access to Americans and the plans participating in exchanges have staffed up and expanded hours to serve the influx of new enrollees,” Nicole Kasbian Evans, vice president of communications for the California Association of Health Plans, told the Business Journal in an e-mail. Lanterman echoed Evans, citing a local example. “Let’s take Long Beach for example,” he said. “Molina Healthcare will effectively double their membership. They are generating jobs in this economy because they’re hiring, doing new construction, entering new contracts and opening new clinics. That’s an expansion of jobs.” Martinez reiterated that a decrease in the labor supply isn’t necessarily causing a drag on the economy. “Workers are going to start making decisions in their best interests,” he said. ■
■ By TIFFANY L. RIDER Editor alifornia’s health insurance exchange for small businesses has suspended its online enrollment portal for retooling and enhancements. Paper applications, which remain the most popular enrollment method, are still being accepted. The online component of Covered California’s Small Business Health Options Program (SHOP) was shut down February 12. It is expected to be up and running again by fall. In the meantime, SHOP Service Center representatives are available to answer questions over the phone and paper applications will continue to be accepted. “The SHOP portal was not meeting the needs of agents or small employers and needed improvements,” Covered California Executive Director Peter V. Lee said in a statement. According to Micah Weinberg, senior policy advisor for the business advocacy think tank Bay Area Council, “Covered California has been taking proactive steps to develop efficient and secure electronic systems and will keep working to ensure the site meets the needs of brokers and their clients.” The majority of Covered California’s SHOP enrollment forms have been submitted as paper applications – the conventional practice of most insurance agents. More than 570 groups have enrolled in SHOP so far, representing about 4,500 individuals. Hundreds of applications are still being processed. “Taking the portal offline will not affect the paper application process, which has been the preferred enrollment method traditionally used by insurance agents in the small-group market,” Lee said. “We are committed to ensuring the smoothest possible enrollment experience, and we believe the new version of the online portal will significantly enhance the enrollment process.” Scott Hauge, president of Small Business California, issued a statement thanking Covered California for responding to feedback from the insurance broker community about improving the online portal’s functionality. “SHOP is still very much a viable option for small business owners wanting to explore health insurance coverage options for their employees,” Hauge said. “As the majority of applicants have already done, business owners can still work with the SHOP Service Center or a Certified Insurance Agent to get coverage for themselves, their employees and their families.” ■
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Health Care News In Brief American College Of Private Physicians Announces Formal Launch – American College of Private Physicians (ACPP), a newly formed national organization for concierge medicine practitioners, is set to offer support and educational opportunities. The organization announced its launch on February 18, according to Thomas W. LaGrelius, MD, chair of the nine-member steering committee for ACCP. LaGrelius, who practices in Torrance, told the Business Journal that the purpose of this private society is to support doctors in direct or private practice through legislative, lobbying, educational opportunities, marketing and more. Thomas W. LaGrelius, MD One of the goals of the organization is to develop an online doctor directory with vetted and board certified physicians “so people can reliably go to that site if they’re looking for a direct practice physician and feel confident that they’re picking a qualified physician,” LaGrelius said. He noted the organization would eventually conduct research on outcomes through concierge, or private practice, medicine. “There’s only one published study on the outcomes on concierge medicine,” he said. “It demonstrated massive savings in money and hospitalization rates for patients taken care of in our kind of practices.” For more information about ACPP, including a membership application, visit www.acpp.md or call 855/332-5120. Newly Proposed Cuts To Medicare Advantage Could Mean Premium Hikes – Cuts to Medicare Advantage (MA) plans recently proposed by the U.S. Centers for Medicare and Medicaid Services (CMS) would impact seniors and people with disabilities in the form of benefit reductions and premium increases. The proposal, released February 21, would cut MA payments by just under 6 percent starting in 2015. In an analysis by global management consulting firm Oliver Wyman, MA plan holders would be negatively impacted to the tune of $420 to $900 per year. A previous analysis from the firm showed a 4 to 6 percent cut in MA payments last year, which translated to from $35 to $75 per month in benefits cuts and cost increases. Back-to-back cuts adding up to a double-digit reduction could cause a “high degree of disruption in the MA market,” according to the report. Karen Ignagni, president and CEO of trade association America’s Health Insurance Plans, responded to the CMS proposal in a statement. “CMS should keep Medicare Advantage payment rates flat next year to protect seniors from another round of harmful cuts that would put at risk the high-quality coverage they like and rely on today,” Shje noted that MA has bipartisan support to maintain current payment levels. The Oliver Wyman report indicates the proposed changes to the MA program