Court ruling leaves employer health benefit burden unchanged.

• Author: Deeg, Eric
• Position: INSURANCE

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Employers waiting for a clear understanding of the future before deciding how to cope with federal health care reform are no better off today than they were before the US Supreme Court ruling.

The court decision, which addressed the individual mandate and Medicaid provisions of the Patient Protection and Affordable Care Act, leaves the federal law largely intact. Still to come, however, are presidential and congressional elections that may shift the political dynamic around health care reform--not to mention regulations that have yet to be issued to turn vague legislative language into specific requirements.

All of this means the precise details of the healthcare system that will be in place beginning in 2014 are still developing. However, the one certainty employers should understand is that health benefit costs will continue to rise no matter what happens next. Employers should position themselves with effective strategies rather than waiting for more shoes to drop.

Health Insurance Costs Escalate

While the bulk of the Affordable Care Act does not take effect until 2014, several key provisions are already in place. These include allowing children to remain on their parents' policies until they reach age 26, extending coverage to children up to the age of 19 even when there are pre-existing conditions, and the removal of annual and lifetime plan limits.

Together, these add to health insurance costs because they increase coverage and extend services. No one expects these provisions to be reversed, even if the Affordable Care Act is "repealed and replaced" or altered in some way. Insurers have said they do not intend to roll them back but instead are already building them into their cost basis.

At the same time, new ways of compensating for care that are designed to reduce cost drivers in the healthcare system (outcome-based rather than procedure-based payments, for example) have not yet taken hold. Therefore, the charges for hospital services, diagnostic tests and sophisticated treatments all continue to rise.

In addition, if the Affordable Care Act remains on track, employers face decisions that will have economic consequences. Even the inaction of sticking with their current health benefit strategy may leave them with unexpected extra costs.

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