The Business of Health Care Reform

Aug 2nd, 2013

Chamber holds Affordable Care Act Briefing Luncheon

Las Cruces business leaders gathered for the Greater Las Cruces Chamber of Commerce’s Affordable Care Act Briefing Luncheon Tuesday, July 16, at the Ramada Hotel and Conference Center. The lun­cheon featured Dr. Martin Hickey, CEO of New Mexico Health Connections, and Jose “Abe” Howard-Gonzalez, attorney with Kemp Smith Attorneys at Law.

“Health care is a business and has to be run like a business,” Hickey said. “The rate of growth in expenditures on hospital care and physician and clinical services is remarkable. While that rate of growth has been on a steep upward curve for two de­cades, the curve becomes nearly vertical in the last five years.”

The facts are alarming. The number of uninsured has grown to an astronomical 83 million. According to the World Health Organization, the United States spends more on health care per capita and more on health care as percentage of its gross domestic products – 18 percent – than any other nation. There continue to be sharp annual increases in premiums and deductibles. Twenty-five percent of state budgets are devoted to health care, and 60 percent of American bankruptcies are generated by health care bills. Consequently,
America’s health care and insurance systems need major reform.

ObamaCare is a blueprint of Romney-Care, a Massachusetts health care insurance reform law, signed into law in 2006 by then-Gov. Mitt Romney. Both plans leave in place employer-provided insurance, Medicare for seniors and Medicaid for the poor, and seek to reduce the number of uninsured.

ObamaCare imposes a new requirement on all U.S. citizens and legal residents to ob­tain government-approved health insurance. The Individual Mandate states an applicable individual must have minimal essential cov­erage for them and their applicable depen­dents – children under the age of 26 – by Jan. 1, 2014 or suffer a penalty – the greater of $95 or 1 percent of annual household in­come per person in a family up to three.

Howard-Gonzalez also discussed mandates and penalties, but with regard to employers.

Under ObamaCare, companies with at least 50 full-time employees will be re­quired to provide qualifying health benefits to workers or face financial penalties. The employer will be penalized for not offering minimum essential coverage to full-time employees and their dependents. Recently, implementation of this major component of
ObamaCare was delayed until 2015.

“During this 2014 transition period, we strongly encourage employers to maintain or expand health coverage,” Mark Mazur, assistant secretary for tax policy at the Treasury Department, said in a statement.

Once implemented, the employer will also be penalized if that coverage is “unaffordable” or does not provide “minimum value.” A plan is “unaffordable” if the employee’s required contribution for self-only coverage exceeds
9.5 percent of the employee’s household income for that year, and a plan fails to provide “minimum value” if the plan’s share of the total allowed costs of benefits provided is less than 60 percent.

With the passage of Obama Care, all employment-based health plans will be subject to nondiscrimination tests. Specifically, employer-provided benefit plans cannot discriminate in eligibility, waiting period, benefits or contributions in favor of highly compensated employees. This provision was to become effective in 2010, but has been delayed until regula­tions are issued.

Effective Oct. 1, employers subject to the Fair Labor Standards Act (FLSA) are required to provide written notice to employees about the Health Insurance Marketplace. Consult the Department of Labor ( index.html) for a model notice.

Howard-Gonzalez emphasized the breadth of the law – regulations are still being issued, but there are still many un­answered questions. However, he recom­mends to plan based on what is known, as the major components are not expected to change.