Impacts of Healthcare Reform Include Healthier Workforce, Higher Costs Across the Board, as Insurance Availability Accelerates
HOUSTON--(BUSINESS WIRE)-- As business leaders, along with state governments, employees and the uninsured clamor to gain clarity around the implications of the healthcare reform bill, they can be assured of increased health insurance costs in the short term and a healthier workforce in the long term, according to panelists at BoyarMiller’s annual Healthcare Breakfast Forum recently.
Houston-based business and litigation law firm, BoyarMiller, hosted the healthcare breakfast forum April 1, 2010, at The Houstonian Hotel to discuss the new healthcare reform bill signed into law by President Barack Obama on March 23, 2010.
“This is an historical, complex piece of legislation that changes the way business is done in this country,” said Bill Boyar, Chairman of BoyarMiller. “As our business community navigates through the myriad of restrictions and requirements under the healthcare overhaul, we wanted to use our ongoing breakfast forum series to host a credible exchange that will help business owners understand how this law will impact their companies.”
The forum, moderated by Boyar, included panelists John Boettiger, Jr., Principal, Deloitte Financial Advisory Services, L.L.P.; James G. Springfield, President and CEO, JGS Advisory Services; Michael A. Sicuro, Executive Vice President and CFO, US Oncology; and Richard Rawson, President, Administaff.
The Cost of Goods
The mandate for businesses to provide insurance for employees will go into effect in January 2014. However, according to Boettiger, consumers will benefit from the most immediate changes including tax credits for small businesses and, under certain conditions, allowing parents to keep their children on their health insurance plan until age 26.
Boettiger explained, “The $940 billion cost of the bill, spread over the next 10 years, includes coverage for an additional 32 million individuals, expansion of Medicaid and children’s health insurance plan enrollment, subsidies to fund insurance for individuals and families up to 400 percent of the Federal poverty level, and small employer tax credits.” He added that, in order to pay for the bill, the Congressional Budget Office proposes several sources of funding including Medicare payroll tax increases, excise taxes on insurance companies and penalties paid by individuals and employers who do not purchase insurance.
Impact on States
“Texas’ six million uninsured individuals lead the nation,” said Springfield. “Small businesses dominate the Texas economy and only 32 percent of those businesses with 50 or fewer employees offer health insurance, compared to the national average of 43 percent.”
Springfield stated that the “biggest problem in Texas is a surging population” with numbers totaling 24,300,000 people in 2008, up 14.3 percent from 2000. “This growth is largely driven by immigrants who cross the nation’s largest border with Mexico,” he added.
Fifty-six percent of births in Texas are covered by Medicaid, which makes up 26 percent of the Texas state budget. One out of every four dollars that we generate in Texas goes to pay for Medicaid. The breakdown of Texas participating in the Medicaid program is 25 percent Anglo, 11 percent African American and nearly 60 percent Hispanic. Between the years 2010 and 2014, when most of this legislation will be made active, population growth in Texas is expected to be 6.03 percent Anglo, 23.46 percent African American and 71.6 percent Hispanic, Springfield said.
“The six million uninsured people in Texas turn to emergency rooms for healthcare,” Springfield said. “The ERs have served as safety nets for the uninsured with increased visits in Texas totaling 33 percent compared with an 18 percent increase nationally, reflective of the high percentage of population without insurance.”
Approximately half of all emergency room visits are primary care, rather than true emergency in nature, Springfield added.
Springfield explained that the new law could put pressure on other areas such as education, as states struggle to balance budgets and find ways to allocate funds for new healthcare priorities, such as the increase in Medicaid eligibility. When eligibility for Medicaid shifts from 26 percent of the Federal poverty line to 133 percent, the Federal government will pay all new costs until 2017 when the states will assume these costs.
Learning from Other Industries
“Healthcare in the U.S. is twice (the cost) of the developed countries around the world and it’s rising at a faster rate than expected,” added Sicuro. To manage rising costs and the other challenges the healthcare industry faces, he suggests the industry can learn from the strategies of other industries such as mortgage banking, technology and gaming.
“Healthcare should follow what these industry leaders have learned and apply it across the board,” Sicuro said. “These businesses have reduced costs and improved quality, service and the bottom line. They’ve also been able to reinvest back into the system, in technology and process improvement. If the entire healthcare system could address these issues, we could pay for almost one-third of the new healthcare bill.”
Advice for Employers
“From the employer’s perspective, everyone must become an educated buyer in order to keep the significant costs of the new bill down,” added Rawson. “Employers — both large and small — must actively manage their health plans.”
Rawson said that Administaff has seen a rise in cost shifting over the last three years as employers pass rising costs of healthcare down to employees. As a result, “the migration to high deductible health plans has skyrocketed,” he said. “The old traditional HMOs are just about dead and the regular PPO programs are strong, but it’s the higher deductible PPOs that people are enrolling in.”
“The world will change dramatically in 2014 based on how much of this healthcare program stays as law,” Rawson added. “The bottom line is that the cost of healthcare is going to go up dramatically. There is no way that it will not.”
“There’s a lot of good that will come from the bill, but there’s a lot we still don’t understand,” Boettiger explained. “The next 90 days will be a challenge as the bill moves along in real-time. We’re pulling the bill apart page by page and making our research public so we all have a better understanding.”
Visit BoyarMiller’s Web site for the forum video and panelist slides from BoyarMiller’s annual Healthcare Breakfast Forum on April 1, 2010.
BoyarMiller holds regularly scheduled breakfast forums three times per year to share business philosophy and insights from business leaders in the Houston area. Since 2003, more than 1,500 business leaders have attended its forums where capital markets are discussed in the fall, real estate in the winter and healthcare in the spring. To sign up for future forums, please visit BoyarMiller.com.
About BoyarMiller
BoyarMiller’s unique strategy and vision, as well as dedication to closely identifying and partnering with clients, distinguishes the firm as a practice with purpose. The Houston-based law firm is comprised of two practice groups: business and litigation. The business group serves multinational companies, middle-market businesses and entrepreneurs in need of collaborative and strategic representation. The litigation group represents organizations of all sizes, from entrepreneurs to Fortune 500 companies, seeking to resolve complex business issues and employment disputes. Please visit www.boyarmiller.com for more information.
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