Healthy Concern: Dealing with Obamacare

Morel industries, a leading Seattle foundry, focuses on its customers needs. It is adept at applying new technology to the casting of metal and excelling at the rapid conversion of prototypes to systems for high-quality production.

There isnt much that confounds Stephen and Mark Morel, who run the family company, but the changes in health care insurance sure do. To attract and retain the best employees in the business, the Morels cover much of the cost of providing health insurance to their 28 employees and their families. But when it came to renewing their health coverage last year, there were more than a few surprising twists and turns.

We were unexpectedly dropped from our existing plan by our health care provider [for 2014], says Mark Morel, the companys vice president. The firm finally did renew the plan in December with some modifications, but the costs shot up 9 percent. Mark Morel adds, We are concerned we may face huge increases [next year].

Its a common sentiment among small-business owners. There is a lot of uncertainty in the health insurance market due to Obamacare, says Rich Able, cofounder and chief marketing officer of X2 Biosystems, a Seattle-based company that sells software the National Football League uses to assess concussion risks among its players. He says it was confusing to determine what provider to use to cover his 10 employees. He ultimately changed providers and chose a plan from Premera Blue Cross.

Insurance providers sent out cancellation notices to businesses because they either changed their plans or introduced new plans to comply with the requirements of the Affordable Care Act, which became effective January 1 of this year. Those actions forced many business owners to scramble to find alternatives.

Lonnie Goodell, director of producer relations and small business group at Group Health, says the cooperative saw the potential for confusion and worked hard to make it easy for small businesses to transition from old to new plans that were packaged to comply with the provisions of the Affordable Care Act.

There wasnt supposed to be so much confusion. Obamacare was supposed to provide cost-effective, one-stop shopping for small businesses through the Small Business Health Options Program (SHOP), a business version of the Healthplanfinder, the state health insurance marketplace for individuals. SHOP was supposed to offer a robust mix of health plans from many carriers.

Small businesses that bought insurance on the exchange would benefit from tax credits intended to offset costs. Group plans offered both in and outside the exchange were required to comply with the stricter requirements of the Affordable Care Act. They were expected to include 10 essential health benefits: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services; prescription drugs; rehabilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care.

While many expected high prices to cover the expanded services, the hope was that the new business exchange would help to hold down price increases. But things didnt go according to plan. Most health insurance providers elected not to participate in the business exchange. Group Health says it was so focused on the exchange for individuals that it didnt have the resources to offer insurance over the business exchange.

This is the biggest change in insurance Ive seen in my entire career and the demands on IT and underwriting were significant, says Melinda Hews, executive director of health insurance exchanges at Group Health and a member of the Washington Benefit Exchange Boards advisory committee.

This year, the only company participating in the business exchange in Washington state is Kaiser Permanente of the Northwest. Its service area includes Vancouver, Washington, and Clark and Cowlitz counties. Alison Nicholson, senior director of individual, family and small business plans for Kaiser Permanente Northwest, says Kaiser worked hard to be included in the business exchange because of its strong belief in the value of competitive insurance marketplaces as well as for the tax credit opportunity.

Companies with fewer than 25 employees who earn less than an average of $50,000 a year are eligible for tax credits worth up to 50 percent of the cost. Originally, that tax credit was supposed to be available only to firms that purchased their insurance through the business exchange.

But with only one insurance provider offering insurance through the business exchange and in only two counties, U.S. Senator Patty Murray negotiated a deal with the U.S. Treasury Department that temporarily extends the tax credit to businesses that obtain insurance outside the business exchange as well.

That tax credit could be rescinded once businesses have a broader range of choices on the business exchange. Catherine Bailey, manager of the small business portion of the Washington Health Benefit Exchange, says she hopes to see two or three new carriers joining the exchange by October 1, in time for coverage in 2015.

The good news is that the Affordable Care Act has had the effect of boosting the overall quality of health-care offerings. Premera introduced 78 new plans for small businesses; Regence introduced 64.

Kirkland-based AAOA Healthcare established The Portfolio, the first private exchange available to small businesses in Washington state. The Portfolio enables small employers to offer a variety of group plans to their employees, replacing the old one plan, best fit approach to benefits, says CEO Pat Chestnut. Employers have had an overwhelming interest in the exchange, he adds. It has been especially popular for those looking to address a workforce spanning multiple generations with very different [health insurance] needs.

Premera Blue Cross is offering discounts in health care premiums to small businesses whose employees participate in wellness programs. For each employee who completes a biometric screening and a health assessment within an allotted time frame, employers receive a 7.5 percent discount on that employees health care premium. Also, employees who complete the screening and assessment get a $100 gift card from Premera.

The Washington Technology Industry Association (WTIA), which was initially concerned about whether it would be allowed to continue offering health care benefits to its member companies under the new rules, recently received approval, and is attracting new members interested in its offerings, which are serviced by Regence.

Washington is relatively unusual in the country in that membership associations such as the WTIA have long provided insurance to four-fifths of all small businesses, lowering costs by aggregating companies into larger risk pools. Their future has been in doubt since the state business exchange was designed to do much the same thing.

Most of the small businesses we work with provide health insurance for their employees and about half include some level of family coverage, says Kevin Briscoe a consultant with CFO Selections, a company that serves small and midsize businesses. Even as costs continue to escalate, companies are finding ways to make sure they continue to offer coverage.

The bad news is that because of the tougher requirements of the Affordable Care Act, many of the plans come with higher prices, deductibles, co-pays and co-insurance, as well as new restrictions on which doctors or hospitals are included in network. To offset higher costs, many companies are sharing premium increases with their employees or offering plans with different cost-sharing options, such as higher deductibles and co-pays, to keep costs down.

Still, a survey by the National Association for the Self-Employed indicated that more than 60 percent of small-business owners were not confident they would be able to obtain health insurance that was both affordable and comprehensive in 2014. That concern could be sorted out over time, because the reality is that there remains a robust set of health care offerings for small businesses in Washington state, says Group Healths Hews.

State officials says small-business owners who are confused should find a broker to help them make their decisions. One insurance broker noted that, despite the noise and confusion, most small businesses have the same options for buying health plans that theyve always had. His advice to small-business owners: It will get better in a few months when things settle down. Take this one year at a time.