Kennesaw State’s Econometric Center and Small Business Development Center hosted a town hall forum to discuss how the Affordable Care Act may impact local business owners when the health care law goes into effect January 2014.
On the evening of May 20, KSU’s Econometric Center, in conjunction with the SBDC invited a panel of three experts well versed in matters concerning the new health care regulations to speak to a group of about 150 local business owners and professionals in the auditorium of the KSU Center.
The panelists included two attorneys and a Chief Financial Officer who took turns discussing the Affordable Care Act (Obamacare) and how it may change the economic landscape for businesses that will now have to provide their employees with health insurance.
The Patient Protection and Affordable Care Act was signed into law in March 2010. The legislation is aimed at increasing the number of insured Americans while decreasing the costs of health care. According to the U.S. Department of Health and Human Services, there were nearly 50 million uninsured Americans in 2010.
David Cole was the first panelist to speak. Cole, a partner at the Freeman, Mathis and Gary law firm, began with a general overview of the new laws and how they will impact employers. Cole works with companies on matters concerning employment law.
He discussed the Supreme Court case concerning the constitutionality of the individual mandate, in which the court ruled that Obamacare is essentially a tax; therefore, it is constitutional to require that Americans be insured. He said the Supreme Court upheld the individual mandate by defining it as a tax rather than a penalty for not being insured.
“All Americans must have insurance or else you’re going to pay a tax,” Cole said. “That tax starts off pretty small and gets increased over time.”
Another change in the health care law, Cole explained, is that insurance companies can no longer deny coverage to individuals with pre-existing conditions. Insurers are also unable to impose annual or lifetime caps on individuals with policies.
Cole said that the new employer requirement known as “Pay or Play” mandates that employers with 50 or more employees have to offer health insurance to those who work full time. For the purposes of the new health care bill, an employee is considered full time if he or she works 30 hours or more per week.
Cole said that employers with 50 or more employees, as defined by the law, who do not provide health insurance to their employees will be subject to fines and penalties for not doing so. These penalties are not tax deductible. Cole said that in order to provide minimum value, an employer’s insurance plan must pay at least 60 percent of an employee’s annual medical costs.
According to the new law, insurance purchased from an employer should not cost more than 9.5 percent of that worker’s take-home pay.
“If it does, it’s too expensive,” Cole said, “and the employer needs to cover a greater share of the insurance premiums for that employee in order for it to be affordable.”
Cole said that larger businesses with more than 200 employees are automatically required to enroll. He said that projections show that the average business will see an expenditure increase of approximately 8.5 percent under the new law.
The next panelist to speak was Gregory Lucas, the CFO for Robert Bowden, Inc., a company that manufactures and sells building products in metro Atlanta.
Lucas opposed the idea of forcing companies to provide their employees with medical insurance, describing Obamacare as “a train wreck with a jetliner heading to it rapidly.”
“I don’t believe that anyone will truly know what the cost and repercussion of this will be over time,” Lucas continued. He said the new legislation will definitely change health care and the employer-employee relationship forever.
“The Patient Protection and Affordable Care Act is anything but affordable,” Lucas said. “The cost of this piece of legislation will be expensive, and the management, administration and compliance [costs] will definitely be burdensome.” Lucas argued that the new legislation will actually work to increase the cost of health care across the board, citing California and Wisconsin’s 30 percent increase in premiums.
“I’m afraid that Obamacare is going to permeate every part of our life, all the way from military equipment to lettuce,” Lucas said.
Lucas said that those most affected by the legislation will be small business owners who are now burdened by having to provide their employees with expensive health insurance. He said because of the new legislation, business owners will have less money to expand their business, provide their employees with raises and hire new workers. The result, he said, will be “across-the-board price increases for most enterprises.” The final speaker was Eric Magnus, a local attorney who deals primarily with wage and hour compliance. He discussed strategies that many local businesses are taking to navigate through the new health care legislation.
“If you have any employees who don’t report all of their income, you now have increased incentive to make sure they do,” Magnus told the audience. “It’s very common in restaurants for employees not to claim all of their income.”
Magnus said that instead of hiring more workers and limiting their hours to fewer than 30 per week, he sees many employers cutting back their staff to fewer than 50 employees and opting to pay more in overtime rather than providing them with insurance.
He also stressed that employers should not attempt to dissuade their workers from asking for insurance as these schemes are frowned upon by the Department of Labor.
“There are two glaring issues affecting health care in America,” Magnus said. “The first is that people are not covered, and we are all paying for the uninsured anyway. The second point is that the cost of health insurance in America is not capitalist. It’s made up by these hospital chargemasters and it makes no sense whatsoever.”
Magnus said that the cost of health care is not competitive, giving an example in which the cost of treating a minor heart attack in Arkansas was about $4,400 while a hospital in suburban New York charged 76 times as much for the same procedure.
“It makes no sense,” he repeated.
He said that major fast food chains such as McDonald’s and Wendy’s predict that the majority of their employees will opt out of Obamacare. This, Magnus said, is because most of the people working in these restaurants are young and healthy. He said that by opting out, these workers would be able to keep more money in their own pockets by simply paying the annual penalty for not being insured.
Audience members were then given a chance to ask questions to the panelists for clarification on the new laws.
After the meeting, local attorney Linda Collett said she thought health care reform was a necessary step for our country as a whole.
“What do we have in place that’s going to keep insurance companies and health care providers from just raking in these huge profits?”
Collett asked, “That’s my biggest concern.”
Mike Hogan, an orthopedic surgeon who works at St. Joseph’s Hospital , said the problem with medicine is like having a disease that you cannot get rid of.
“If you don’t make enough money to cover your expenses, you go out of business,” Hogan said. “If we could get tort reform, we could drop the cost of medicine overnight by 20 to 30 percent.”
Hogan said by getting rid of the lawyers and all the malpractice suits, we could reduce the cost of health care in this country substantially.
Hogan, who is originally from England, has been practicing medicine for 30 years. He said he prefers the American medical system to the U.K.’s National Healthcare System because there are long waiting lists to see doctors in nations with nationalized health care.
He says that our current health care system provides us with the best doctors available.
“I’m not saying our health care system in this country is perfect,” Hogan said. “It’s far from perfect but it can be fixed.”
President Obama’s health care law will push 7 million people out of their job-based insurance coverage — nearly twice the previous estimate, according to the latest estimates from the Congressional Budget Office released Tuesday.
President Obama’s health care law will push 7 million people out of their job-based insurance coverage — nearly twice the previous estimate, according to the latest estimates from the Congressional Budget Office released Tuesday.
Note: Governmental agencies are required to provide workers’ compensation benefits to their employees but are not required to purchase insurance or receive approval as a self-insurer. They generally either 1) obtain an insurance policy 2) participate in an insurance pool, or 3) maintain a separate appropriation for workers’ compensation.
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The Newborns’ Act is a federal law that prohibits group health plans and insurance companies (including HMOs) that cover hospitalization in connection with childbirth from restricting a mother’s or newborn’s benefits for such hospital stays to less than 48 hours following a vaginal delivery or 96 hours following delivery by cesarean section, unless the attending doctor, nurse midwife or other licensed health care provider, in consultation with the mother, discharges earlier.