Reform creating uncertainty - Westfair Communications

Business leaders in suburban New York and Connecticut expect the change of leadership in Congress to trigger significant changes to health care reform, including the delay or defunding of key provisions of the federal law. But even those actions are unlikely to alleviate existing concerns and confusion about the sweeping overhaul.

“Businesses like clarity, and they just don”™t have that right now in terms of health care reform. What they have is a lot of uncertainty,” said Paul Vitale, vice president for government and community relations at The Business Council of Westchester in White Plains.

Last March, President Obama signed into law two pieces of legislation collectively known as the Patient Protection and Affordable Care Act. During the next decade, the legislation could bring about near universal coverage and transform the way health care is provided and funded nationwide.

The reform law expands Medicaid and reconfigures eligibility standards under the program, mandates the creation of a health insurance exchange in each state through which individuals and businesses can buy health insurance coverage, provides subsidies to eligible consumers to improve affordability of insurance coverage and imposes a wide range of reforms on employers and commercial insurance providers.

From now through 2013, the changes primarily involve new taxes, fees and mandates on individuals and small business. Most health care system changes start in 2014.

Support for reform vs. cost concerns
Business owners and membership organizations throughout the Hudson Valley and Westchester and Fairfield counties appear to support various elements of the legislation, including increased portability and the elimination of pre-existing conditions. Some, like Stewart Strauss, co-owner of Strauss Paper Co. in Port Chester, are even comfortable with the mandate for employers of a certain size to provide insurance.

“It”™s the right thing to do,” said Strauss, who employs 80 full-time and 20 part-time workers. “We consider our employees as part of our family. If a business can afford the rent, it can afford to provide insurance to its workers. If someone claims he can”™t, he”™s a poor businessman ”“ or shouldn”™t have employees.”

However, even Strauss seems troubled by the scope of the new legislation, as well as the amount of time and money that businesses may have to invest in compliance. Some business owners, including Seth Arluck, president of New Hampton Lumber Co. in New Hampton, blame the law for an unexpectedly large spike in premiums.

“Our health care costs are increasing 25 percent next year,” Arluck said. “That”™s just nuts.”

Arluck has been operating New Hampton Lumber, a family owned business since 1938, the past 30 years. He has four employees, down from seven a few years ago, and provides individual health insurance to each one. “We”™re a small company and it”™s hard for us to compete for good workers. Providing health insurance has helped keep us competitive. But the costs are skyrocketing and the new law has introduced all kinds of new regulatory requirements.

“It”™s like a gun pointed at the head of every small-business owner,” Arluck said.

NFIB tells businesses to be prepared
According to the National Federation of Independent Business (NFIB), the uncertainty and angst among business owners is justified. The organization warned its membership that even though “complex provisions” of the new law have already proved difficult to interpret, they “must be prepared to deal with a series of new tax and regulatory requirements.”

Now that Republicans have won back the House and narrowed the Democratic margin in the Senate, there are likely to be changes to the existing health care law.

Mike Elmendorf, New York state director for the NFIB, predicts the newly elected members of the House and Senate will repeal and replace the “fatally flawed law” with “real health care reform that lowers costs and increases choice” for small business.

“This law does neither ”“ and in fact has the opposite result for many small-business owners, while also increasing their taxes and drowning them in ridiculous paperwork and administrative burdens. This law is not reform ”“ in many ways, it made a bad situation worse for small business,” Elmendorf said.

Fighting for ”˜real reform”™
NFIB has already joined a lawsuit filed by attorneys general in 20 states challenging the constitutionality of the law. It also acknowledged that it worked to elect members of Congress “who will fight for real reform” ”“ and to defeat those who supported the existing law. “I think with the sea change in Congress, you will see an effort to go back to this issue and try to get it right,” Elmendorf said.

But Elmendorf is in the minority: Most business leaders think it”™s unlikely the law will be repealed. Rather, they suggest, newly elected lawmakers are likely to stall implementation by refusing to fund key provisions, or, alternately, by modifying select portions.

And everyone agrees that change of any kind will take time. For now, businesses have little choice but to comply with the law as it stands, including a controversial provision that requires nearly 40 million U.S. businesses to file 1099 tax forms for every vendor that sells them more than $600 in goods starting in 2012.

Businesses must already file Form 1099s with the IRS when they buy more than $600 in services from a vendor in a year. The new provision extends the requirement to the purchase of goods.

It was included to prevent vendors from underreporting their income to the Internal Revenue Service. But many, including some of the lawmakers who passed the bill, are now concerned it will swamp businesses with paperwork ”“ and even President Obama has indicated he will entertain a repeal of the 1099 requirement.

What about cost control?
Critics say the new law does little to address the cost of health care, a necessity for reform. Business organizations warn ever-rising health care costs are threatening the viability of U.S. businesses and job security for millions of Americans.

“If rapidly escalating health care costs in Connecticut aren”™t addressed, our economic competitiveness will be damaged and our municipalities will have to make draconian cuts to town services and educational programs,” noted The Business Council of Fairfield County in Stamford, Conn.

The Business Council of Westchester also insists that it”™s necessary to control costs. The organization recommends using a number of cost-effective strategies such as medical liability reform, health information technology, small-business pooling, combating fraud and abuse, consumer-driven health options, wellness prevention, administrative simplification and allowing individuals and small business to deduct the full cost of health insurance expenses.

Matthew Fair, vice president of Pierson & Smith Inc., a Norwalk, Conn.-based insurance firm, said the existing federal law favors access and subsidies over cost control. In addition, he said, the law provides access to coverage with no underwriting safeguards and fails to address the way employers manage long-term medical insurance costs. “There”™s too much too soon,” he said.

Modification discussions premature?
Fair said many of his clients are expressing relief that Congress will revisit the law when the new House and Senate convene next year. “But there is still a lot of anger and frustration,” he said.

Joe McDonagh agrees, but thinks discussions about repeal or even modifications are premature. “We need to give the law some time,” he said.

McDonagh is an independent broker specializing in employee health plans for small business and a member of the board of SustiNet, a Connecticut state health care plan that was passed into law in July 2009. The goal of SustiNet is to provide affordable health care coverage to 98 percent of Connecticut residents by 2014.

The U.S. Supreme Court apparently agrees that reacting too swiftly to the law is a mistake. This month, the high court rejected a long-shot request for a review of the Obama administration”™s health care overhaul before the matter has been fully litigated. The court”™s rejection of the challenge, brought by a conservative legal group in California, had been expected: The high court almost never hears cases before they have been fully litigated in the lower courts.