I have read everything coming out of Washington, as I’m sure many of you have as well. Unfortunately, it’s all sound and fury with very little substance therefore difficult to analyze. So, since I do not have any hard facts and little or no detail about the effect of the proposed changes, here are a few educated guesses:
Penalties/taxes – These punitive measures are almost assuredly going to be repealed. The Republicans view the challenge to insure the uninsured as more of a “carrot and stick” concept (the stick being taxes and penalties, while the carrot is refundable tax credits) Tax Credits, depending on how they are applied, could be a game changer for the low-wage hourly service sector marketplace. Imagine the employer no longer having to contribute to the cost of the health plan, simply redirecting withholding from statutory taxes to a vehicle for funding their contribution to premiums.
Limited Medical Plans (Industry leaders) – talking with these folks, I get the sense that they are way out ahead of the curve, as they have already taken steps to file various product options in all states in anticipation of any of the contingencies that may come out of this repeal process. One option that they have discussed is a sort of a mid-level limited risk plan, with much higher benefits than the limited medical (MEC Plus & MVP) but nowhere near as expensive as a major-medical plan. They believe that the government will allow caps on coverage and do away with costly requirements, such as one size fits all unlimited lifetime benefits.
Low-Wage Workforce Challenges – On the Surface you would think that once an employer is no longer required by law to cover low-wage hourly workers, many of them will immediately cease to sponsor plans like limited (skinny) MEC. In my opinion, this may not be true. There is an old axiom in the insurance industry that says “you can give away benefits, but it is very difficult to take them away” add to this the pressure that the Trump administration has put on immigration and what you have is a tightening hourly workforce. Many employers will find that they will need to continue to offer some form of health insurance benefits in order to attract and retain hourly workers. Industries most affected by this are: Food services, hospitality, agriculture, retail and light manufacturing.
I would be very interested to hear what your clients think about the prospect of no longer being required offer minimum benefits to their low-wage hourly employees. Will they be more likely to continue to offer or will they immediately drop coverage when they are no longer subject to punitive action?
I apologize for not having more specific analysis, but this is about as much as any of us know to date. I think that tax credits are going to be a very important element to all of this, but there is little detail on how they would be applied, except two imply that they would be available where in employer does not provide coverage. I read this as, if an employer were to drop current compliant coverage (MEC or Limited Medical) could the refundable tax credits might take the place of the employer funding.
Food for thought?