Last spring, Capps Home Building Center in Virginia received a phone call—“out of the blue,” general manager Bruce Shelton recalls—from a Florida-based insurance agent who came on strong with a pitch about the need for the dealer to quickly set up an appointment so the agent could “analyze” Capps’ health-insurance plan, which covers 25 of 38 employees.
It wasn’t as if that plan was deficient: By asking its associates to assume one quarter of their coverage’s expense, Capps has held its annual net health care costs to single-digit increases. In 2011, health care equaled 1.08% of Capps’ sales, down from more than 2% a few years earlier and better than what many other dealers pay.
But Shelton thinks that call from Florida could be a harbinger of things to come, as agents, insurers and businesses across the country scramble for better position in a health care arena about to undergo an epic transformation. “It’s going to be the Wild West out there,” he predicts.
Capps and every other U.S. company must now deal with the ramifications of the Patient Protection and Affordable Care Act, a behemoth also known by the shorthand term Obamacare, which President Barack Obama championed in 2009, Congress passed in 2010, and the Supreme Court declared constitutional on June 28.
How To Learn More
Dealers would be wise to learn as much as they can about the Affordable Care Act before devising strategies to address its implications.
The best source for the latest information is still insurers, which are positioning themselves to be major players as the Act unfolds. Agents and brokers can be helpful local resources for guiding companies and employees trying to figure out what their next move is. But find out where any resource stands with regard to the Act to determine how unbiased its advice is.
Knowing the Act’s mandates is critical. A good place to start is the Kaiser Family Foundation’s website, which provides an excellent 13-page summary of the Act’s complexities . Another source is Law.com, which in July posted an analysis of the Supreme Court decision’s impact on health care reform .
To understand how the federal government intends to pay for this $1 trillion-plus program, the Congressional Budget Office and the Joint Committee For Taxation in March updated their estimates for expenditures and offsets, complete with chart breakdowns.
The National Lumber and Building Material Dealers Association is keeping tabs on the Act’s progress, and will eventually produce guidance for its members. Dealers should also consult with their local associations, which are likely to have better market-specific information.
For ideas about buying health care insurance and controlling costs efficiently under the new rules, check out The Employers’ Coalition for Health care, Inc.. A subsidiary of the McLean County, Ill., Chamber of Commerce, the coalition was formed in 1994 and currently has nearly 200 participating members.
The Society for Human Resource Management , has been covering the Act from its outset, including its potential impact on employers and workers.
— John Caulfield
The Act has two big goals. The first is to more than halve the number of uninsured Americans (there are more than 50 million today, and potentially 60 million by 2022). The second is to reduce the nation’s health care bill, a tab that covers not just insurance premiums but also the cost of programs like Medicare and Medicaid and taxpayer support of hospitals and emergency rooms. The country now shells out $2.6 trillion on health care annually, equal to 17.9% of the nation’s gross domestic product (GDP) in 2010.
The Act doesn’t directly confront the rise in employer’s insurance premiums, which, according to the Kaiser Family Foundation, now cost companies 113% more for family coverage than they did a decade ago. According to the Building Material Operations Comparison survey of roughly 150 dealers nationwide with average revenue of $16.9 million, the typical dealer paid $207,541, or 1.27% of sales, for group health insurance.
If the Act succeeds in reducing overall health care costs, it could moderate future growth in premiums. But many of the benefits will go to public rather than private health-care spending, and those won’t show up for several more years, as parts of the Act take effect. Even with the act, Kaiser predicts the nation’s health-care bill will swallow 19.6% of GDP by 2021.
Confusing Times
Aside from the justifiable presumption that health care costs will rise, at least in the short term, confusion and obliviousness reign about how this legislation will play out. A poll Kaiser conducted in May found that while 44% of the public viewed the Act unfavorably, 58% oppose defunding it. Then again, only 55% of Americans even knew what was in the Supreme Court’s decision when polled by Pew Research Center, which also found that 37% of American adults under 30 years old had no awareness of the Act itself.
The political climate is fogging up the glass, too. As of July, House Republicans had tried 33 times to repeal the Act. Republican presidential candidate Mitt Romney has said he would move to repeal it if elected. And 16% of 4,000 companies polled recently by Mercer, a global human resources consultant, say they’ll wait to see who gets elected first before they adjust to any new health care reality.
This isn’t a topic pro dealers seem comfortable discussing in detail, either. Only three of 30 companies ProSales tried to contact for this article responded to interview requests.
“Nobody knows what’s going to happen; it’s still so up in the air,” says Paula Siewart, president of the Northwestern Lumber Association in Minneapolis. “And I don’t see our guys rushing out to find out how it’s going to affect them.”
St. Cloud, Minn.-based Mathew Hall Lumber, will rely on advice from its agent on what to do when its insurance policy is up for renewal this fall.
“I have no clue, our employees have no clue, and I’ll bet you some insurers have no clue, either,” laughs owner Loren Hall, whose company pays 75% of the cost to insure 55 of its 70 employees and their families, and has seen its health care costs rise by 15% to 20% annually in recent years
In early July, the National Lumber and Building Material Dealers Association (NLBMDA) wasn’t at the point where it could offer strategic advice, said its regulatory counsel, Frank Moore. But advice is what dealers will desperately need as they seek to make practical decisions about if and how they can afford to offer employees health care coverage.
After struggling through a long recession in which their benefits plans and employee relations often took major hits, the last thing dealers need is to be facing a massive health care overhaul and asking “What’s next?”
So ProSales has provided some guideposts, drawn from various sources, to tell you about responsibilities and options. One takeaway is that getting your employees more involved in their health care could go a long way toward minimizing any negative impact the Act could have on your business.
