Closer look: Companies begin to feel the effects of health care reform
More than a year after President Obama passed the health care reform law in March 2010, challenges are headed to the U.S. Supreme Court for a ruling on the law's constitutionality. Last year, former Florida Attorney General Bill McCollum filed a lawsuit opposing the health care legislation that was signed onto by 25 other states. In January, U.S. District Judge Roger Vinson ruled that the federal overhaul of the health care system was unconstitutional. After that ruling, several states refused to recognize the law. At press time, hearings were scheduled for May in the U.S. Court of Appeals for the 4th Circuit in Richmond, and two other appelate courts would address the issue in June.
In addition, Virginia Attorney General Ken Cuccinelli II challenged Congress' authority to pass the Patient Protection and Affordable Care Act, which requires nearly all Americans to be covered by their employer's insurance or to buy their own. At press time, the Supreme Court had rejected Cuccinelli's appeal to short circuit the usual appeals process and rule immediately.
In the meantime, U.S. companies, big and small, are starting to feel the effects of health care reform. Back in October 2009, Glass Magazine talked to glass and glazing company owners regarding the then proposed changes (see Page 10). In this issue, glass executives and human resources managers discuss how the new reform has affected their companies and how they are handling the changes.
Michelle Valdez, manager, Employee Services, Walters & Wolf, Fremont, Calif.
"Our last two benefit renewals added an additional 2 percent-3 percent to our regular renewal rates. The underwriters are building that in upfront, no questions asked. It was something overlooked, not questioned or avoided, by the Health Care Reform Committee that has had an impact on employers that do provide medical coverage for their employees.
"We are doing several things [to handle the increased costs]. First, pushing back on the underwriters to come up with more competitive renewal figures. That's an automatic even without health care reform. Also, we are redesigning health care plans. Minor changes to co-pays, deductibles, and in and out patient charges have made a difference in premiums and tend to have a minor impact on employees. Cost-sharing with the employees is also another avenue to be looked at. Even small increases per week can help out.
"And lastly, [changing] carriers. This is the most aggressive change, but in some instances, we have found that other carriers are providing more competitive rates for the same levels of coverage. The challenge is communicating the change, finding a good carrier that has a large comparable network of doctors, designing a plan that is similar to the previous, and all the paperwork. We have found that bringing the employees together and explaining the economic impact the company and employee would have if we didn't change carriers goes a long way. Many employees will be grateful that the employer 'has their back.' I also think that in this day and age, employees know what's going on. They see the news, read the papers and understand that the cost of almost everything is going up, especially in health care.
"The other resource that can be maximized is the Section 125 Flexible Spending Account. If employees are educated on how to use their flex accounts to cover out-of-pocket costs, they will realize very little impact on their wallets. Utilize the IRS maximum on medical reimbursement for your employees now, because soon this amount will be capped at a much lower amount per year, per employee.
"It's always been the Walters & Wolf culture to minimize out-of-pocket costs, while still providing a high level of medical coverage for their families. It's just the right thing to do.
"Health care reform changes, in some cases, are good in the sense that the lifetime limits are removed [and] pre-existing conditions are removed for children, and soon, for adults. Those changes will make health care better for people overall. The increase in costs is the 'not so good part,' but as Mike Wolf would say, 'There is no free lunch!' "
Paul Landgraf, director, Employee Benefits and Health, Guardian Industries Corp., Auburn Hills, Mich.
“Clearly, health care reform adds a new level of complexity, and an additional administrative burden on company-sponsored health plans. Some of the required plan design changes―like covering adult children up to age 26 and the elimination of the lifetime maximum―will certainly result in added cost.
“However, Guardian was pleased to see that the new law puts an emphasis on wellness promotion, because this goes hand-in-hand with HealthGuard, our global health promotion program. We’ve had HealthGuard in place for 28 years now, and the health and welfare of our employees and their families are embedded deep in the Guardian culture.
“Over 99 percent of our U.S. employees had health screenings or routine physicals last year, so, their awareness of their potential health risks is strong. We have many great stories of both employees and spouses who learned of a health risk that they may not have been aware of, and then went out and took positive steps to improve their health. And that’s a big part of the Guardian culture too, that we provide tools, and the employee takes charge and does the right thing.
“Effective health promotion has certainly helped Guardian control its health care costs. But it also has helped our employees and their families lead healthier and more productive lives, and in some cases, it has actually saved lives. And the value of that just can’t be calculated."
Bill Evans, president, Evans Glass Co., Nashville
"Health insurance premiums have risen significantly. Frankly, it costs Evans Glass Co. more to insure our employees. The rise in premiums has forced us to change some aspects of the health insurance package in order to try to contain the increase. These changes include higher co-pays on prescription drugs and office visits, higher maximum out-of-pocket expense, etc. Some of this increase is because insurance companies are forced to cover items they previously excluded.
"Evans Glass Co. is absorbing some of the cost increase, passing some of the expense along to its employees, and passing some of it to customers in the form of higher prices. We are restricted in how much we can raise prices by competition. Consequently, Evans Glass Co. absorbs most of the expense.
"Increased costs are never good for business. However, the increased costs of health care reform are small compared to the increase of aluminum materials or the increase of the glass surcharge.
"Overall, I would say health care reform has neither been good nor bad for Evans Glass Co. Change is always hard and almost always resisted. Often, however, change proves beneficial over time. We just have to wait and see. In this day of never ceasing media coverage and instant messaging, it is hard for us to be patient and allow change to occur over an extended period of time.
"As part of the employment package, Evans Glass Co. has paid 100 percent employee's health insurance premium for several decades. Thus, we have not been forced to buy insurance. The health care reform has alerted some of our employees about health care coverage. It is something they took for granted and now they realize they have had something others lacked. I still am concerned about the possible impact on the motivation of doctors to provide complete care."
Gilbert A. DiMaio, president and CEO, CBO Glass, Alden, N.Y.
"I just finished speaking with our CFO and human resources director. Both indicate that our company has felt no positive effect or change as a result of the Health Care Reform Act. Of our roughly 250 employees, about 200 are covered by union-sponsored health programs, and the balance of our management and administrative employees are covered by our company-sponsored Blue Cross policy.
"Both the union and company plans have experienced some 30 percent cost increases to the premiums, [and] the employees―both union and company―have had their payroll deduction portion increased. The good news is that these families have health care coverage; the bad news is that it costs the employees and our company more money to provide. If the health care reform was to cause insurance premiums to go down in cost, none of us have seen this happen."
Guy Selinske, president, American Glass & Mirror, Prior Lake, Minn.
"Our health care coverage costs increased this year, just as they have in years past. The percentage seems about the same as recent years. The bill was not the disaster that some predicted, nor the great revolution that some hoped for. We are controlling costs by increasing our deductibles and reducing the quality of our coverage. Sadly, there was not much health care reform in the Health Care Reform Act. It would be more aptly called Insurance Reform Act, but there was not much of that either. As I predicted in the article in October, we would not get the best bill because of political posturing."
Tracy Thompson, director, Benefits and HR Systems, Apogee, Minneapolis
"The health care reform so far hasn't affected us much other than the addition of additional dependents up to age 26 without the requirement for student status. We are still reviewing all options for plan offerings and design over the next couple of years in preparation for the changes that are effective in 2014. It is too soon to comment on how the changes will affect us, as the review is in process."