The New Healthcare: Love it or Hate It
April 21, 2015
By Lois Clinco, CPA, CFE
The latest LIBN Power Breakfast was held on March 26, 2015 at Crest Hollow Country Club, Woodbury, NY—the topic “The New Healthcare: Love It or Hate It!
The event brought together about 120 people and was led by Moderator Dr. Martin R. Cantor and panelists Kevin Dahill, CEO of Nassau/Suffolk Hospital Council; Dr. John Rizzo, Professor, Economics & Preventive Medicine at Stony Brook University and Chief Economist, LIA; Jay Silverman, Partner/Co-chair, Health Law Department at Ruskin Moscou Faltiscek; and Lou Basso, President/CEO of Alcott HR.
The panelists discussed the Affordable Care Act (“ACA”) and its current and future impact on Long Island and across New York State.
The event started with Dr. Cantor, Director of the Long Island Center for Socio-Economic Policy and Chief Economist for Destination LI, referring to the recent Supreme Court case King v. Burwell, in which the Supreme Court is being asked to rule on a four-word phrase in the law that links the subsidies to marketplaces “established by the state.” The Obama Administration disputes the literal wording “by the state” and goes to the intent that it was meant to include states which accept the federal exchanges. (The ACA authorizes subsidies, in the form of refundable tax credits, for health coverage purchased through state-established exchanges. These subsidies may be paid by the U.S. Treasury directly to a taxpayer’s insurer to offset premiums owed.) Panelists were asked if the words were taken as written, would the plan be unraveled. Mr. Silverman, an attorney, said no, that it is difficult to “take away a benefit.” It is more likely that if the Supreme Court rules in favor of the petitioners, although we are told there is no backup plan, there either is or will be and more than likely the current ACA plan will be tweaked and modified.
Discussion among the panelists touched on the unemployment statistics on Long Island and how deceiving they are. Although overall unemployment has decreased, people are being hired as part timers (working less than 30 hours per week). Dr. Rizzo stated that he has found that firms are either delaying hiring until more is known about how the ACA will impact them, hiring employees on a part-time basis making sure they work less than 30 hours; or taking full-time people and cutting their hours. Also discussed was affordability and how the average age of Long Islanders is increasing, which means that health costs on Long Island will also increase. All panelists agreed with the sentiment that, as a community, we have to figure how to keep the younger people on Long Island to balance out and lower or maintain health costs.
Mr. Basso spoke about the ‘Cadillac tax’ which is to begin in 2018, having been deferred from starting earlier. Employers have not begun feeling the ‘pain’ of this facet of the ACA and realizing additional costs. The Cadillac tax is an excise tax of 40% of an amount to be considered an ‘excess benefit.’ (When the cost of health benefits exceeds the annual cost of $10,200 for self-only coverage and $27,500 for family coverage, the ‘excess’ cost is taxed at 40%. The annual limit is subject to adjustments). Mr. Rizzo also discussed the ‘pain’ side for the employers: Offering plans that are “sufficiently rich” to keep their employees vs. paying the fine/penalty.
Mr. Dahill spoke about the impact from hospitals and how their business model has to change. The ACA needs healthy people to join which will offset the unhealthy people who use the plan and benefits offered. Mr. Dahill spoke about how North Shore LIJ is trying to combat and deal with the ACA by putting their own plan on the Exchange.
The consensus is that it’s still not fully known how the ACA will impact employers as well as the people using the Exchanges. Stay tuned….