Employer Health Costs Rising Slowly? Some May Not Be Offering Obamacare’s Minimum Benefits
Yesterday, we discussed the slow rate of growth of premiums in employer-based plans. Today, Kaiser Health News reported a surprising discovery: Some employers who assert they are offering benefits may not be. Indeed, their plans may not even offer hospitalization benefits.
How do they get away with it? As often the case with Obamacare, it is a glitch in information technology:
A flaw in the federal calculator for certifying that insurance meets the health law’s toughest standard is leading dozens of large employers to offer plans that lack basic benefits such as hospitalization coverage, according to brokers and consultants.
Like insurance companies, self-insured employers must certify that their plans pass health-law standards for consumer value.
One official way to do that is to get a passing score on the Department of Health and Human Services’ “minimum-value” calculator, an online tool.
An employer checks boxes on the screen indicating what benefits are offered — such as hospitalization, mental health care and pharmacy coverage — as well as workers’ share of the cost. The calculator then determines if the plan covers enough potential medical costs to be considered adequate insurance.
“There are a lot of errors in the calculator,” said Shannon Demaree, director of actuarial services at Lockton Companies, a large broker. “It allows more plans to pass as qualifying coverage than we believe really do.”
The article makes clear that nobody knows how many employers are exploiting these errors. Nevertheless, it uncovers at least one benefits administrator that appears to help employers figure out how to navigate the calculator even if they do not have hospital benefits. Temp staffing firms appear to be the most interested in taking advantage of this situation.
I do not want to go out on a limb, but until we know the extent of this, we have to consider that this might be a factor explaining why employers have not yet abandoned health benefits, as some feared. If the U.S. Department of Health & Human Services follows this up, by fixing its calculator and investigating firms which are exploiting the errors, we can look forward to seeing a jump in employer-based health costs and more dumping of coverage.
“Like insurance companies,self-insured employers must certify their plans pass health law standards for consumer value.”
What standards are you referring to?
Self-insured employers must meet some of the standards of insurers, but several are up to their discretion. For example, they need not offer essential health benefits.
Don Levit
Ron:
Those numbers for small employers are indeed terrible.
As you know, one huge claim at a small employer can send its rates skyward, for much of the premium is based on that group’s particular experience.
With The SHOP exchanges requiring insurers to place all their small employer clients in one risk pool, won’t that help stabilize premiums, particularly when large claims occur?
Don Levit
Dear John and Friends:
Every time I hear a report like this, that shows the raggedness of healthcare coverage, I think of how many affected people are saying to themselves “If we only had single payer, this wouldn’t happen.” Then, of course, everyone would be screwed, permanently, instead of only some people, temporarily.
Try this on for size: Suppose that small companies that were contract suppliers to large companies were permitted to become part of the employee group that had either group insurance or were self-insured. The obvious flaw of these individual plans or those covering only a few people is they do not spread risk.
Wanda Jones
San Francisco