Is the new federal health care legislation too weak in enforcing mandated insurance coverage by individuals and companies? Or does it take a sledgehammer to employers with its financial penalties?
The public debate has turned less rancorous since Congress passed and President Barack Obama signed into law this year the Patient Protection and Affordable Care Act. Yet the debate over the bill”™s costs and merits as a tool of much-needed reform continues, as health care and insurance experts showed at a recent panel discussion at the Marriott Westchester in Tarrytown sponsored by The Business Council of Westchester.
Dr. Michael S. Sparer, chairman of the health policy and management department at Columbia University”™s Mailman School of Public Health, called “pretty weak” the federal penalties on individuals who fail to buy health insurance and on companies with more than 50 employees that do not provide group coverage.
Sparer said the law does not tackle issues of costs caused by the high price of delivered services and “rapid diffusion” of medical technology. He said the Obama administration”™s projected cost savings seemed “overly optimistic.”
Dr. Simeon Schwartz, president of WESTMED Medical Group, was concerned newly enacted penalties will not be sufficient to encourage Americans to buy insurance and so begin to relieve the heavy cost burden of care for the uninsured. Schwartz also said health care providers must be made “more efficient and more accountable for the cost of care.”
Martin Hill, health care practice director in the New York office of PricewaterhouseCoopers L.L.P., said the company”™s business clients face a “sledgehammer penalty” of $3,000 per employee if their health insurance coverage is found inadequate and $2,000 per employee if even one full-time employee is not covered in the workplace and buys insurance in the market exchange that will open in 2014.
Rima Cohen, a health policy counselor at the U.S. Department of Health and Human Services, said the Affordable Care Act “tries to strike just the right balance” between penalties that are too weak and ineffective and too heavy. She said the mandate for individuals is strong enough to likely move “a vast majority” of uninsured citizens to obtain insurance.
In Massachusetts, where universal-coverage legislation already has been implemented, only 3 percent of residents are not insured, compared to the national average of about 15 percent, Cohen said.
Norman Michaels Jr., president of Michaels & Associates Inc., an employee benefit consulting and brokerage firm in Armonk, warned that Westchester companies such as his that are intermediaries between insurance carriers and buyers will be “squeezed out” as major insurers change their distribution systems and especially focus on direct purchases by consumers.
Michaels later predicted the new insurance exchanges “are going to be a disaster. They want to make this a consumer-driven product, but the general public doesn”™t understand medical insurance.”
Insurance carriers are not likely to be squeezed out of business with new federal regulation and the law”™s requirement that 85 percent of premiums be paid out toward patient claims, Hill said. “We”™re certainly going to see some medical insurers drop out either voluntarily or because they can”™t perform with other carriers,” he said. “I wouldn”™t expect any kind of wholesale exit from the market by insurers.”
