Gallagher Benefit Services. State of the Healthcare Market 2012: Healthcare Reform and Its Impact on Community Colleges

Transcription

1 Gallagher Benefit Services State of the Healthcare Market 2012: Healthcare Reform and Its Impact on Community Colleges Presented By: Scott R. Baldwin Area Senior Vice President Education Sector Managing Partner Gallagher Benefit Services, Inc

2 State of the Healthcare Market 2012 Healthcare Reform (PPACA) Legislative changes Mandates Cadillac Tax Economic Pressures Employer-based model of delivery Declining economy Unemployment Market Consolidation Fewer carriers providing health insurance New forms of delivery 2

3 State of the Healthcare Market 2012 (cont d) Factors driving change in healthcare Aging population Increased technology Advances in medical care Health care costs Trend factors Prescription drug costs Rx spend as % of total cost Plan migration Emerging trends in plan design 3

4 Patient Protection and Affordable Care Act Background: On Tuesday, March 23, 2010 President Obama signed into law the Patient Protection and Affordable Care Act (H.R. 3590) the Act ). On Thursday, March 25, 2010, the House and Senate passed The Health Care and Education Reconciliation Act of 2010 (H.R. 4827) ( the Reconciliation Bill ) which amends several provisions of the Act. Together, the bills comprise the overall healthcare reform legislation package. President Obama signed the Reconciliation Bill into law on March 30,

5 PPACA Timeline Early retire reinsurance High-risk pools OTC drug reimbursements HSA penalties W-2 Reporting Employee notification requirements FSA limits Medical industry taxes Itemized medical expense deduction changes Medicare taxes Part D drug subsidy deduction eliminated 6/23/10 9/23/10 1/1/11 1/1/12 1/1/13 1/1/14+ Coverage expansion mandates Patient protections W-2 Reporting Plan disclosure requirements Employer and individual mandates Insurance exchanges Patient protections Cadillac excise tax (2018) 5

6 Administrative Impact on Community Colleges Communication requirements Educating Employees about Options Standardized Communication Practices Data collection requirements W-2 Reporting IRS/HHS Communication Requirements Benefits changes Grandfathered Status FSA restrictions Preventative Services Annual/Lifetime Limits 6

7 Financial Impact on Community Colleges Plan design Common Community College Plan Designs Cadillac Tax implications Optimal plan design Contribution strategies Plan Migration Penalties/Fees Incentives Optimal contribution strategy 7

8 PPACA: Supreme Court Oral Arguments* March 26, 2012 Does the Supreme Court have jurisdiction to hear the case? On Monday, 3/26 the Court heard 89 minutes of arguments on whether the legal challenges to the requirement that all Americans buy insurance must wait until after that part of the law has taken effect in Bottom Line: Most legal experts believe that the Court will NOT find that the Anti-Injunction Act bars the Court from ruling on the merits of the case. As such, the experts are confident that the Supreme Court will rule on PPACA s constitutionality. *The arguments lasted for approximately 6 hours over a three-day period, the longest argument in more than 40 years. 8

9 PPACA: Supreme Court Oral Arguments (Cont.) March 27, 2012 Did Congress exceed its authority when it enacted the individual mandate? On Tuesday, the Court heard 120 minutes of arguments on the central issue of the case: did Congress overstep its powers by adopting the individual mandate? Bottom Line: Prior to oral arguments, many legal experts believe that the mandate would be ultimately found to be constitutional. However, many legal experts are now stating that there is a real possibility that the individual mandate may be found unconstitutional given the ferocity of skepticism expressed by the five conservative justices. 9

10 PPACA: Supreme Court Oral Arguments (Cont.) March 28, 2012 (morning session) If the individual mandate is unconstitutional, is it severable from the rest of the law? The Court heard 90 minutes of arguments in the morning session on the issue of severability. Under consideration was whether the entire law can stand if the Supreme Court determines that the individual mandate is unconstitutional, or should the entire law be struck down. Bottom Line: Based on the extensive questioning by the Justices, it seems clear that they do no envision an easy answer to this question. Several Justices seemed to favor striking the entire law, others seemed to favor leaving some sections of the law intact, but expressed concern over the process and criteria to be used to decide which sections could stand. 10

11 Court Oral Arguments (Cont.) March 28, 2012 (afternoon session) Is the expansion of Medicaid coercive and in violation of the Tenth Amendment to the Constitution? The Court heard 60 minutes of arguments in the afternoon session on the expansion of Medicaid. PPACA requires states to expand their Medicaid programs to cover all individuals at or below 133% of poverty level beginning in Bottom Line: Although none of the lower courts, which considered the case, decided that the Medicaid expansion was coercive, the questions posed by the Justices during oral arguments make it clear that this will be given serious consideration. 11

12 PPACA: Where Do We Go From Here? Year Provision 2012 New disclosure requirements to plan participants (Summary of Benefits and Coverages) W-2 reporting required for value of health care benefits (for W-2 issued January 2013) Reporting requirements to HHS regarding benefits 2013 FSA medical contributions capped at $2,500 per year Medicare payroll tax increase for individuals who make more than $200,000 Medicare Retiree Drug Subsidy can no longer be deducted for employers 12

13 PPACA: Where Do We Go From Here? Year Key Provision 2014 Value of wellness incentives may be increased from 20% to 30% Most individuals will be required to have minimum level of coverage Employer Mandate of Pay or Play Medicaid eligibility in all states Health benefit exchanges operational for small employers and individuals Waiting periods cannot exceed 90 days Premium and cost sharing subsidies for low-middle income individuals 13

14 Community College with more than 50 full time employees Offer Coverage + NO EEs on assistance OR Offer Coverage + EE(s) on assistance OR No Coverage + EE(s) on assistance $3,000/ee on asst (with a cap) $2,000/FTE less 1 st 30 ees Voucher Option for EEs Ineligible for Assistance

15 PPACA: Where Do We Go From Here? Year Key Provision Cadillac Plan Tax Implications: 2018 limits - $10,200 for employee and $27,500 for family 2018 $5,280 and $14,235, respectively, in today s dollars 40% excise tax on additional dollars spent 15

16 PPACA: Managing Reform Recommended Approach Work with Experts (Consultants, Attorneys, Peers) Ability to measure the financial impact of your plan Legal experts reviewing compliance requirements Knowledge of the Community College marketplace Revenue Sources Bargaining Process Common Communication Practices 16

17 PPACA: Managing Reform Creating Your Strategic Plan Understand the size of your organization Map out the impact, year by year Begin the implementation phase in advance Monitor legislation 17

18 PPACA: What The Future Might Look Like Plan design Consumerism Increased integration of wellness strategies Contribution modeling Reporting and compliance Eligibility audits W-2 reporting Household incomes Affordable plans Cadillac tax analysis 18

19 PPACA: Prepare Today for Tomorrow Current plan and local factors will drive how you proceed Proceed with caution much we still do not know Remain current on regulations, trends, and ever-changing legislation Do your math Educate and communicate educate and communicate educate and communicate educate and communicate 19

20 Questions 20