Affordable Care Act: What Massachusetts Can Tell Us
President Obama signed the Patient Protection and Affordable Care Act (PPACA) into law on March 23, 2010. It has several components, including*:
1) Individual Mandate – all Americans must have health insurance or pay a penalty. Like all good laws, there are exceptions – the very poor and those with religious views who have filed for an exemption, and members of Indian tribes (to name a few).
2) Employer Mandate – these requirements were designed to “support” or ensure the compliance with the individual mandate by making it easier for working Americans to obtain affordable healthcare.
*The Medicare component of the law is outside the scope of this blog.
In June 2012, the U.S. Supreme Court upheld the “individual mandate” portion of the law. Many employers were waiting for that decision to be handed down before making any changes to their coverage offerings and administrative policies.
Today, it is clear that most of the PPACA will be in effect in 2014. That leave less than 18 months for companies to get their “ducks in a row” so that they can comply.
The only thing that is certain is that there is a lot of uncertainty – for both human capital management (i.e. staffing) firms and their clients and employees. Our industry, which took a severe hit during the Great Recession, has been recovering – adding back almost 72% of the jobs lost. The fear is that (now) with this new law, our industry’s (and our clients’) landscape could be altered drastically.
The exact rules and guidelines for implementing PPACA are being continuously written by various government agencies. The advice can be mind-boggling, for the act has different requirements for employers of different sizes. There is a great PPACA summary document, including several sets of FAQs, at the Department of Labor’s website, but many are leery to make any predictions before all the rules have been released. The nuances and exceptions can be overwhelming.
As some staffing firms look to estimate their costs, it might be worth a visit to the state of Massachusetts to see how healthcare reform – albeit on a much smaller scale – has impacted both businesses and the state’s general economy. This is worthy of a look, because the federal reform was modeled on the experience in Massachusetts.
The Kaiser Family Foundation has reported that, 6 years after the state of Massachusetts approved its own healthcare reform law, trends are starting to appear. Some companies are happy and have figured out ways to work within the legislation, while others remain unhappy.
Staffing buyers, in the state, were extremely hesitant to accept higher rates, and this trend was repeated in Staffing Industry Analyst’s 2012 Contingent Buyer Survey where 62% of buyers (nationwide) stated that they expected to absorb none of the costs brought on by the PPACA. The average response was 15% of costs.
Under the Massachusetts law, employers with 11 or more employees must contribute to health insurance coverage or pay a “fair share” contribution (similar to PPACA’s fee), and many firms simply chose to pay the contribution.
Some other results from the Massachusetts’ mandates include:
1. Massachusetts’ uninsured rate dropped by approximately half following the implementation of the health reform legislation.
2. Employer-sponsored insurance remains the dominant source of coverage within the state. There is no evidence that the “public coverage” is crowding out employer-sponsored health insurance.
3. There is anecdotal evidence that the mandates have been a “boon to business” – especially those businesses that started getting ready early and kept an open line of communication between themselves and their clients.
4. Public support for the health care reform remains high.
The bottom for business is clear – get ready for the changes required under the PPACA. It has been reported that many employers are in good shape when it comes to the changes that will be required by the first of the year – for example, reporting the value of the healthcare coverage on an employee’s W-2 forms. However, the overwhelming majority of mandates are required to take effect in 2014 and there is a lot of planning that still needs to be done to meet those requirements.
Snelling is here to help. We are watching the rules and guidelines as they are being announced as if they were a serial drama airing on cable TV. The workplace is changing dramatically, and Snelling plans to lead the charge to this new era.
Bookmark The Snelling Blog and our Candidate Connection Blog to learn more about your industry and the changes that are coming. New posts are created a weekly, and we welcome your feedback and your thoughts.
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