Looking to 2014, but it's early to develop detailed plans

January 09. 2012 3:00AM

Looking to 2014, but it's early to develop detailed plans

Rich Balka, president of Home Rubber Co., in Trenton, says he no longer can afford to pay 100 percent of his employees' health benefits, and has to reduce the company's contribution to 70 percent, with the remainder on his workers' shoulders.

Most New Jersey companies of all sizes have begun doing at least some of their homework on how the 2014 health care reform law will impact employee health care insurance — or if they will provide coverage at all.

By all accounts, small businesses of 50 or fewer employees likely will undergo the most changes, with midsize and big companies of more than 200 workers opting to keep the status quo.

Currently, 1.3 million New Jerseyans are without health insurance. Of that number, about 900,000 will join the ranks of the insured by 2014, while another 400,000 residents are undocumented, said Dave Knowlton, CEO and president of the New Jersey Health Care Quality Institute.

"It's a big deal," he said of the expected surge.

Joel Cantor, director of Rutgers University's Center for State Health Policy, pegs the number of newly insured in a couple years at about 440,000, based on studies conducted by the center. He expects the percentage of uninsured, non-elderly New Jerseyans to drop from 14.5 percent to 8.6 percent by 2014.

The expected upswing of newly insured can be credited to one of the primary provisions of the 2014 Patient Protection and Affordable Care Act: Most Americans are required to get health care coverage, many with government subsidies if their income level qualifies. It also mandates that no one can be denied coverage because of a pre-existing medical condition, and also removes caps on coverage in most cases — provisions currently being reviewed by the U.S. Supreme Court.

"It's advantageous for both the employer and the employee," said Ray Castro, senior policy analyst with New Jersey Policy Perspective. "Most of the uninsured are already employed."

Most experts agree that companies currently offering health care insurance will continue to do so, especially for the larger businesses. But some dramatic changes are likely in store at small companies, where employees who now get at least a portion of their health care coverage from their employer may find that benefit disappearing in a few years. Those employees would have to obtain individual insurance through a state-run exchange.

"Most of the new opportunities are for the small businesses," Cantor said, especially the formation of the exchanges. There are 240,000 small businesses in New Jersey employing 1.2 million workers.

But for small-business owners, those opportunities meet head on with bottom-line realities and a history of adjustments they've had to make over the past few years because of relentless double-digit increases in premiums.

Rich Balka, president of Home Rubber Co., in Trenton, used to provide full health care coverage for his 34 employees. Now, he provides about 70 percent, with the remainder "being borne entirely by the employees." It's been painful, he said, but "I couldn't budget anymore."

"I've had to make a lot of adjustments," he said. He also said the company "might be better off going to the exchange. … One way or another, there will be a change," though it's too early for him to have reached conclusions yet about the impact of the exchanges.

Pam Bronander, vice president of KMC Mechanical Inc., in Boonton, also reduced her company's coverage of her 20 employees' insurance from 100 percent to 70 percent about seven years ago.

"I can only afford what I can afford," she said, noting that health premiums have increased 10 to 15 percent annually during that time period.

As for the 2014 deadline, "right now I'm focused on keeping my company busy," and Bronander said she hasn't gotten down to the details. "It's too far on the horizon."

Unlike larger companies, businesses of 50 employees or less will not be penalized if they do not provide insurance for their employees, though tax credits will apply if they do. At those larger firms, "we're unlikely to see much change," Cantor said. "For the most part, the coverage they provide now is what they'll provide in 2014."

John Sarno, president of the Employers Association of New Jersey, agreed, adding that he expects "there will be adjustments to what's already in place."

What's been in place since 1993 is a sweeping set of pioneering health care reforms initiated by the state that addressed many of the same reforms the federal government is now requiring. The transition from rules and regulations in effect now to those in 2014 will be relatively seamless, except for the creation of health care exchanges.

"New Jersey already has a lot of the (President Barack) Obama reform," said Knowlton, who formerly served as state deputy health commissioner. Consumer protection and accessibility were the key components of the state's reform legislation.

"The state is better equipped to handle," the reform drive, said Wardell Sanders, president of the New Jersey Association of Health Plans, whose six insurance carrier members provide health care coverage to 7 million residents. But there is "a lot of work (that) has to get done, and there's anxiousness about the timing," as there's a rollout of required initiatives from now until 2014.

"There's a lot of different parts and different points in the timeline," he said.

It's hoped the health exchanges will become competitive private insurance marketplaces, in which individuals and small businesses comparison shop for affordable and qualified health benefit plans. These pools have power in collective numbers to help drive down the cost of coverage, because workers and businesses won't have to deal individually with insurance companies.

Horizon Blue Cross Blue Shield of New Jersey, the state's largest carrier, champions the establishment of the exchanges.

"We believe exchanges can be a key element to promoting affordable health insurance for individuals and small employer groups," said Larry Altman, vice president of the office of health care reform for the insurer. "They should promote competition, transparency and true consumer choice, and ensure that all competitors are treated equally."

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