Last week, I attended the National Association of Health Underwriters (NAHU) Capitol Conference in Washington, D.C. In addition to listening to speakers who shared their views on healthcare reform, I attended three meetings with California legislators to share NAHU’s concerns and goals, and also to share my experiences and those of my clients and their employees.
Healthcare reform is still very much a work in progress, and the current administration is very divided about the next steps. As of today, nothing has changed in the group health insurance market. The employer mandate is still in place for groups with 50+ employees, and 1094/1095 reporting is still required. Health insurance rates and plan designs for 2017 were filed and approved by the CA Department of Insurance last year, so those will not change.
Based on early indications from the administration, it’s likely that the first significant reforms will impact the individual market. If the individual mandate to purchase insurance is lifted, I expect that some insurance carriers may choose to stop selling individual plans (like Humana has done outside of California), creating fewer options for people who want to purchase individual insurance, and likely driving up individual premiums. This may have a secondary effect on the group market if insurers try to recoup losses by raising group premiums. Groups may have employees who want to return to their group plans if the individual market is no longer an option for them or their dependents. Groups may also have employees who want to cancel their group coverage if they are no longer mandated to have it.
My biggest concern is the possible capping or elimination of the employer exclusion. This is the tax break that employees and employers get on the money they spend on health insurance. Capping or eliminating this tax break would effectively increase the income taxes on employees (immediately lowering their take-home pay), and it would increase the payroll taxes on employers (reducing profits). This would be a huge blow to the employer-sponsored health insurance system, which currently covers more than 80% of American employees.
I will continue to keep you informed of healthcare reform changes, particularly those that directly affect group health plans. I will also continue to advocate on behalf of my clients and their employees, as well as on behalf of health insurance brokers, whose businesses are directly impacted by these changes. As always, please feel free to reach out to me if you have any questions or concerns.