Workers expect their defined contribution plans to play a greater role in their retirement income than annuities.
Nov. 15--DECATUR -- The top Decatur Memorial Hospital official predicted to a group of area business leaders Wednesday that the end of employer-based health insurance appears on its way to becoming a reality.
DMH President and CEO Ken Smithmier said during a presentation in the Decatur Club that the effects of the Affordable Care Act seem to be leading toward a national health insurance system. Smithmier's presentation, along with comments from DMH human resources director Kevin Horath, was mostly critical of changes to provisions in the law.
"We should not be allowed to be kidded by politicians or by ourselves about the real cost of this," Smithmier said.
After analyzing the cost of providing health insurance to employees against paying government-imposed penalties for not doing so, Smithmier said some companies might see significant savings by simply paying the penalty.
DMH, for example, could pay a $4 million penalty, based on its approximately 2,000 employees, rather than spend an estimated $20 million in health insurance costs, or about $10,000 per covered employee, Smithmier said. Other major companies are likely coming to the same conclusions, he said.
Horath urged business owners and employees to become educated about the changes that are taking place, with some of the major shifts coming in the next two years.
"The Affordable Care Act has changed the landscape of health insurance since it was passed in 2010," Horath said. "Changes are being made incrementally. It's now safe to say health care reform is here to stay."
Businesses should be looking at the costs of providing insurance, Horath said. Those with 50 or more employees will now be mandated to provide insurance to those working more than 30 hours a week, Horath said.
"We're going to see some major changes come about," Horath said.
In addition to letting business leaders know what to expect, Horath said employees need to know how the changes will affect them.
"Many employees don't understand their insurance until they need to use it," Horath said. "They need to know what they have and how it works. We need to educate them before tragedies and major events come."
DMH officials have been spending time during its open enrollment period educating its employees about what is happening, Horath said.
"We've been making changes to our health plan," Horath said. "Health care reform didn't take care of the cost factor. Costs could go up endlessly."
Those on a high-deductible plan using a Health Savings Account, or HSA, will be able to keep their dependent children on their health plan until age 26. However, Horath said the changes come with a cost, as they won't be able to use money from their HSA for their children past age 19, or age 24 for those remaining students.
Penalties for misuse of HSA funds will increase, and the money from those accounts will no longer be able to be used to buy over-the-counter medicines such as Tylenol and Claritin, Horath said.
"It's limiting their ability to use their money," Horath said. "If they're not aware of this and get audited, it has a major impact. It's a tax increase, in essence."
Those with a Flexible Spending Account, or FSA, will be limited to annual contributions of up to $2,500, Horath said. Doing so will limit the amount of pre-tax money that is available to spend on health care related expenses, he said.
Horath urged businesses to carefully design the health insurance plans they offer and not wait until the last minute to make changes. Penalties for not complying with the law can be steep, and he said businesses must make sure the cost of insurance doesn't prohibit an employee's ability to pay for it.
In 2014, Horath said, employers will be required to provide employees with health care insurance while offering an option to opt out. Among other things, employers will need to decide what their default plan will be, he said.
Horath said a controversial change has been stipulating women's preventive health services are covered 100 percent, including contraceptives.
"It is going to cost," Horath said. "The health plan is going to have to assume those costs."
Smithmier said almost everyone in the country, from businesses to individuals, will feel the effects of the changes.
DMH expects to lose about $10 million in revenue from Medicare reductions by 2019, Smithmier said. As a result, he said the hospital is already looking to cut expenses where it can.
Smithmier said the local economy is being affected, as building projects aren't being initiated and not every service that is currently offered will continue to be here.
More can be done to control health insurance costs by reducing expenses from preventable problems such as obesity, hypertension and diabetes, Smithmier said.
"Nothing is in the Affordable Care Act that deals with these problems," Smithmier said. "The No. 1 issue in health care is what we do to ourselves."
The system should quit paying for those types of issues, and Smithmier said individuals would then be more inclined to fix the problems they have.
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