The new health care law will affect every single American and every business owner . . .
This spring President Obama signed into law a major overhaul of the U.S. health care delivery system. Other than the federal stimulus and financial bailouts, the new health care law garnered more attention than any other legislative pursuit in 2010. As well it should.
At a cost of at least $940 billion over the next 10 years, the new law will have a major impact on every aspect of medicine and the delivery of health services in America. Who will be affected? The simple answer: everyone. Having helped thousands of presidents, CEOs and entrepreneurs access the very best hospital care for eight years through Healthnetwork Foundation, I’ve heard much about the law’s impact on our health system from each segment of the industry.
Officially named the Patient Protection and Affordable Care Act (PPACA), debate nonetheless continues regarding what benefits (or lack thereof) the enormous federal law will create. PPACA says it will cover 32 million uninsured by 2019. Dependent coverage extends to age 26. No lifetime limits. Auto enrollment of employees in company health coverage. No rescission of coverage (except for fraud). States will set up health insurance “exchanges.” The Internal Revenue Service will be more involved in health care oversight.
Because the law costs so much and affects so many aspects of society, most provisions will be phased in. In 2011, restrictions and penalties on the use of Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs) will become law. In 2012, W-2 tax forms must state the value of employer contributions to health coverage. In 2013, companies must provide employees with formal notice that health coverage is also available through Exchanges (set up and administered by the federal government). In 2014, there will supposedly be no waiting periods beyond 90 days.
Everyone agrees that we should make our health system more efficient and effective. Yet, because the new law elevates the federal government to such a preferred position, every Republican in the House and Senate voted against the bill. Since passage, 20 states have filed suit against all or some aspect of the new law, and a petition to essentially repeal the law, introduced by Rep. Steve King (R-Iowa), is gaining traction.
It’s important that we understand how the law will affect us as citizens and as business leaders. During the health care debate earlier this year, I asked leaders at the nation’s top hospitals what they thought of the bill. These leaders employ tens of thousands of employees — and their “product” is directly affected by the new legislation. So I wondered why more hospital CEOs didn’t take a public stance.
Three hospital leaders confidentially told me the same thing: because they run multi-billion-dollar organizations which depend on government payment, government certificates, tax rulings and their non-profit status, they didn’t feel comfortable putting their hospitals’ standing in jeopardy by criticizing the legislation. Privately, they’re concerned about the decreasing reimbursement rates that will surely come; they’re concerned that an already-constrained system with too few doctors and nurses will be further burdened when a previously uninsured 32 million people begin seeking care.
According to the National Small Business Association, an alarming 79% of entrepreneurs say they have limited (62%) or no understanding (17%) of how the new health care law will affect business. Jay Schreibman, president of LSG Insurance Partners in Bloomfield Hills, Mich., told me that his clients are only beginning to understand the administrative burden the new law will have on their companies. A leader in corporate benefits programs, Schreibman laments, “You will never lift the wage earner by burdening the wage payer.”
More bad news for the cost-conscious and businesses: According to the Heritage Foundation, a Washington-based think tank, the new law increases the threshold to itemize health expenses from 7.5% to 10% of adjusted gross income beginning in 2013; seniors over age 65 would receive a four-year extension of the 7.5% income threshold (until 2017). This provision will raise taxes by $15.2 billion. The bill also repeals the current-law tax deductibility of subsidies provided to companies offering prescription drug coverage to retirees, raising taxes by $5.4 billion. Many say this provision will lead companies to drop their coverage as a result.
Rather than completely overhaul such a substantial portion of our national economy, it would have made more sense to focus first on helping just those 32 million uninsured. Rather than burden the business owners we depend on to drive our weak economy back to promising growth, I would have preferred that lawmakers consider and pass smaller laws, gradually.
Billionaire Michael Milken is at the forefront of health care policy, having started the Prostate Cancer Foundation, FasterCures and other health organizations. Milken recommended changes focus on personal responsibility, such as rewarding individuals who lose weight with lower health insurance rates, just as we reward safe drivers with preferred car insurance rates.
Let’s hope that more focus on personal responsibility and free market solutions will be available to Legatus members and all Americans in the coming years as the health care debate continues.
Adam R. Kaufman is the co-president of Healthnetwork Foundation, a Cleveland-based nonprofit that provides executives with access to the best hospitals in the world.