Hope Is Not A Strategy

It appears as though last month’s SCOTUS decision has not quieted the talk about how we shouldn’t plan for the implementation of PPACA. How are your clients responding to the latest “strategy”? Read on for our thoughts.

 Stay out of the hypothetical and move forward with the tactical

An article in the Sunday issue of the New York Times caused me to reflect on my childhood. Now, I know I’m dating myself, but my earliest education about the legislative process can be traced to Schoolhouse Rock, those catchy ditties interspersed between Saturday cartoons.

I'm just a bill.

Yes, I'm only a bill.

And I'm sitting here on Capitol Hill.

Well, it's a long, long journey

To the capital city.

It's a long, long wait

While I'm sitting in committee,

But I know I'll be a law someday.

At least I hope and pray that I will,

But today I am still just a bill.

The title of the article was, “New Health Law Battle: Insurance Exchanges”. It appears as though last month’s SCOTUS decision has not quieted the talk about how we shouldn’t plan for the implementation of PPACA, because the major reforms planned for 2014 aren’t likely to happen. The current legal challenge will be whether individuals buying coverage on the federal exchanges will be eligible for subsidies. It appears as though the drafters of the legislation made another goof (remember the omission of the severability clause) by explicitly stating that subsidies will be provided to residents of a state to help defray the cost of health plans offered “through an exchange established by the state.”

The opponents of PPACA are articulating a strategy that goes like this: Republican governors should stonewall and not establish state-based exchanges, because, while it is true that PPACA calls for a federal exchange, the drafters did not outline a provision for subsidies on this exchange. Without subsidies, there are no triggers for employer penalties. Without employer penalties, employers won’t have to offer acceptable and affordable coverage to all employees over 30 hours a week, and therefore the “job-killing” aspects of PPACA will be avoided. Conclusion? Employers don’t have to prepare for the implementation of PPACA, because it will never happen.

Hypothetical Strategies

This is where my modified civics lesson comes in: a bill becomes a law. Regulators interpret laws to write regulations, which can either be enforced or ignored. Executive orders can trump all.

The media likes to spend a lot of time talking about what could happen in the never-ending battle over health care reform. As consultants on the front line of helping real-world employers design benefits plans that are affordable, sustainable and attractive enough to meet human resources objectives of a specific firm, you can’t spend too much time on the hypothetical. You need to focus on the most likely scenarios and position your clients appropriately.

As my Dad likes to say (and he wasn’t the first), “Hope is not a strategy.”

Real Solutions

With over 600 employers on our CHROME Compass platform, we see that the overwhelming employer trend is to deal with health care inflation through cost-shifting, while simultaneously attempting to curb consumption through consumer-directed plan designs. (Some critics would say these strategies are redundant.) Offer rates aren’t declining, but take up rates are – especially by low-wage individuals. This trend is creating adverse selection among low-wage populations. Employers with large low-wage populations are challenged to avoid this adverse selection either by limiting eligibility (a strategy made illegal by PPACA) or by lowering employee contributions to “buy” more employees into their plans. Depending upon their starting point, however, the latter strategy consumes even more of the already scarce compensation dollars.

These employers need creative new strategies, not the “hope” offered by the latest scenario of how PPACA will be overturned or never implemented. To not move forward is to maintain the status quo, and the status quo is a continued erosion of the employer-sponsored health insurance system that will put increasing pressure on employers, employees and their consultants. There will be no winners in this game.

Fortunately for us at ContinuousHealth, many of you are aggressively attacking the status quo through optimization strategies. You’re implementing several cost reduction programs (e.g. dependent eligibility audits) and making changes to the overall benefit plan design, including decreased emphasis on major medical and increased emphasis on excepted benefits (like the CH Complete Card) to control medical costs while driving increased employee satisfaction. We will continue to work with you to design new products and services that support your tactical endeavors.

Helping your clients focus on business while pundits focus on political wrangling may be the most challenging task of all.

Eric Helman

678.397.0070

This article was first featured in the July 10th edition of our e-newsletter, Directions. If you'd like to receive that weekly email, contact directions@continuoushealth.com. (Your email will never be shared, sold, or otherwise distributed, and you will receive only the type of content for which you sign up.)

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