As the fog clears on the complexities of the Affordable Care Act (ACA), it becomes possible to make a few crystal ball guesses on the prospects for the new law. So here go some guesstimates, based on conversations with hundreds of smart business and professional people in the industry who trying to figure out what’s next.
• Although the early returns show a few instances of premiums dropping for 2015 policies on some exchanges, most of the early announcements show higher premiums. Since most of the major elements of ObamaCare drive costs up, not south as promised, my prediction is for double-digit increases in premiums in 2015 and 2016.
• Government subsidies will offset some of the pain, but they will have to be moved higher than originally set to attain access goals.
• The government mandate and penalties on corporations have been moved out to 2015 and 2016, depending on company size. It is an unpopular part of the new law, so Democratic candidates will probably run for cover and drop the company mandate in the heat of 2016 presidential politics.
• The government mandates and penalties on individuals will also be eliminated, for the same political reasons. The personal penalty for not having health insurance is only $95 this year, but rises to $325 in 2015 and $695 in 2016. That is not going to happen in the run-up to the November 2016 election.
• When the dust settles, the nation will learn that ACA has made only a dent in the estimated total of 50 million uninsured Americans. It is even possible that more people lost their old health plans than gained coverage under the exchanges and expansion of Medicaid. Some employers will drop benefit, and the prices for policies on the exchanges may be too high or some people to replace lost coverage, even after the subsidies.
• Employers and individuals will figure out how to game the complexities of the new law, such as employers encouraging or incenting their sickest employees to leave the company plan for the exchanges. The employer would simply offer to pay for a platinum policy on the exchanges for the departing employee. Both would be better off, at the expense of the taxpayer. The employee would have deluxe coverage, and the employer would avoid a mammoth bill for the disease treatment. In effect, catastrophic coverage will be come socialized.
• Some employers will move to “defined contributions” for their workers. They will just write a check to the employee, or raise his or her pay, and direct them to the exchanges. They will wash their hands of health care as a defined benefit. Some large companies have already made that decision for their retirees and part-time workers.
• Employers will continue to do somersaults to keep their part-time workers under 30 hours, when the ACA mandate kicks in.
• Small employers will do the same to stay under 50 employees, where the ACA exemption goes away.
• Employers who keep the benefit will move to self-insurance to get away from ACA’s many requirements. Already, more than 80% of companies with more than 200 employees have moved in that direction. Fully insured plans, which are under-managed, will just be too expensive.
• Ironically, because many policies offered on the exchanges offer high deductibles and HSAs, the move to what’s called consumer-drive health care will accelerate. Some 40 million Americans already have personal health accounts.
It would be great if some of my pessimistic prognostications prove wrong. But one guess that won’t prove wrong is that the upheaval in the giant heath care sector is far from over.