Obamacare Has 'Bent the Insurance Cost-Curve North, Not South,' Insurance Executive Tells House Panel
(CNSNews.com) - "There's no question that the (Affordable Care) Act has, to this date, bent the health insurance cost curve north, not south, and the forecast in that regard is growing darker," an insurance benefits executive told a House panel on Thursday.
That's because the law requires health plans to cover individuals, such as adult children, that they did not cover in the past; it bars health plans from putting lifetime and annual dollar limits on benefits; and it requires plans to provide preventive care services -- including contraceptives in a few months' time -- at no out-of-pocket cost to the enrollee, Edward Fensholt told the House Subcommittee on Health, Employment, Labor, and Pensions.
"These mandates have increased our clients' health plan costs 2 to 3 percent on average to this point," he said. And he said the costs will escalate further when new rules -- such as reductions in waiting periods and the automatic enrollment requirement -- take effect in 2014.
Fensholt is a senior vice president of Lockton Companies, LLC, an insurance brokerage and consulting firm that provides employee-benefits expertise to 2,500 mostly middle-market employers.
In addition to the Affordable Care Act’s coverage mandates, Fensholt said a "great frustration" for his clients is the law's "many additional administrative burdens."
Under federal law right now, Fensholt said, a simple group health-care plan is required to supply up to 50 separate notices, disclosures and reports to enrollees or to the federal government -- often more than once. He noted that the Affordable Care Act added more than a dozen of those notices, disclosures and reports.
Fensholt gave several examples: Under the Affordable Care Act, health plans must provide a "four-page, double-sided summary of plan coverage in a very hard-wired format at specific times, not only to enrollees but to individuals who are merely eligible for coverage. And plans face fines of up to $1,000 per violation of this requirement," he said.
And starting in 2014, the law will require "significant and frequent reporting by employers," including what specific medical coverage the employer offers; a roster of employees who are eligible and enrolled in the company's health plan and whether those employees are full-time or part-time; the cost of the employer's health insurance offerings, and the employer's and employees' respective shares of that cost; and how many months of the year an employee and each of his enrolled dependents were covered by a company-sponsored plan.
"Our clients are already drowning under the cost of provi ding robust health insurance to employees," Fensholt said. "Rather than tossing employers a lifeline, the Affordable Care Act is in many ways an anchor -- albeit a well-intentioned one -- by piling on additional costs and burdens."
Fensholt said his clients don't understand why -- at a time when they're struggling to provide a fringe benefit -- "Congress would make the process more expensive and more complicated, rather than less so."
Bill Streitberger, vice president of human resources for the Red Robin restaurant chain, told the panel that when health care costs increase, his company has less money to invest in opening new restaurants.
For the last three years, he noted, Red Robin's health care costs per employee have increased more than six percent every year -- a much greater pace than the growth of Red Robin's sales or net income, he said.
The Affordable Care Act's 2014 mandates, Streitberger added, could negatively impact the ability of companies to grow and offer benefits to their employees.
He said the law will force companies like Red Robin "to decide on whether to reduce benefits to maintain affordable coverage, or accept the burden of increased company contributions, limiting our ability to continue to grow and create new jobs. Either way, we feel it could be a lose-lose for Red Robin" and its employees, he said.