Affordable Care Act has pluses, minuses for county
Businesses could have to offer health benefits to more employees.
By Benjamin Graham, Jackson Hole, Wyo.
July 4, 2012
The Affordable Care Act could yield a wide variety of changes in Teton County — from lower insurance premiums to increased health care costs for businesses to higher prices for lift tickets.
The U.S. Supreme Court’s decision to uphold most of the act will reshape health care in the U.S. Jackson Hole, with its tourism-based economy and younger, healthier and relatively uninsured population, could see repercussions different from much of the rest of the country.
With roughly 25 percent of the county’s population uninsured, the Affordable Care Act is expected to vastly expand insurance coverage to county residents and could potentially lower insurance costs.
“In Teton County, [rates] very well could go down, because our pool is healthier to begin with,” Dawn Sheue, president and principal agent of Summit Insurance Services, said.
A large number of people are projected to enter the health insurance pool when the individual mandate takes effect 2014.
In the county, the newly insured most likely will be young, healthy people who previously did not receive insurance through an employer and couldn’t afford to pay for it out of pocket.
“It’s on record that we’re the most healthy county in the state,” Sheue said. “It’s going to attract carriers who will want to insure this population base, because the risk is more spread out.”
If the county’s pool of young, healthy people seeking coverage grows because of the law, competition between interested carriers could drive prices down, she said.
Employers and experienced brokers may be able to negotiate lower rates for employer-based groups based on employees’ healthy track record, she added.
“I believe there is a silver lining for Teton County with this law,” she said of the prospects for premiums to decrease.
For the first year of the mandate, individuals who choose not to purchase health insurance will have to pay to the Internal Revenue Service the greater of $95 or 1 percent of total income.
The tax will go up to $325 the following year, or 2 percent of total income. In 2016, individuals without coverage will pay $695 or 2.5 percent of annual income. After that, the tax will adjust for cost of living.
Also beginning in 2014, insurance companies won’t be able to deny coverage to adults with pre-existing conditions, providing another benefit to the community, said Lou Hochheiser, St. John’s Medical Center’s new chief executive officer. The law made the same change for children in 2011.
Co-pays for preventative care have already been removed under the law. Residents are now able to seek out health care services they may have previously thought too expensive, such as mammograms and colonoscopies, Hochheiser said.
The new law also allows states to set up health care plan exchanges, which could help the underinsured. (For more on Wyoming and exchanges, see sidebar on page 22A.)
“Many young families in Teton County have catastrophic coverage where they may pay a premium of $5,000 or $6,000 a year, but they also have a $6,000 deductible,” said Barbara Herz, vice chairwoman of the hospital board. “Now they’ll be able to join an affordable exchange.”
Impacts on seasonal workers
The law does not address in detail how a large segment of county residents — seasonal employees — will be treated.
While seasonal workers will be able to purchase health insurance through exchanges, the law could force employers to pay health care costs for employees who have not enjoyed such benefits in the past.
“It definitely will have an increased cost on all of our business and will impact how we price our products,” said Jerry Blann, Jackson Hole Mountain Resort president.
A lingering question remains: To what extent will the resort and other tourism-industry businesses have to cover the health insurance costs of those who do not work year-round.
Beginning in 2014, the new law will require firms with 50 or more workers to pay a $2,000 penalty for each full-time employee not receiving health insurance. The penalty also could apply if the insurance plan provided doesn’t meet a certain standard.
When calculating a business’s total number of workers under the law, part-time employees are include, but seasonal employees who work fewer than 120 days per year are not.
Large employers could still be forced to pay a penalty for full-time seasonal employees, regardless of how long they work, according to a report from the Congressional Research Service.
“The law is pretty clear that anyone over 30 hours a week is full time,” Scott Horn, chief administrative officer at the resort, said. “What’s not clear is the definition of a seasonal employee. All of those details have not been fleshed out.”
20 percent receive insurance
Under most health plans offered today, employees are required to work a certain number of days before they become eligible for health insurance.
If a full-time seasonal employee works the number of days required to obtain health insurance but is terminated a month later at the end of the season, it remains to be seen whether he or she would retain health coverage at the beginning of the following year’s season.
During peak ski season, the resort employs 1,300 workers. Roughly 25 percent are year-round employees, Blann said. About 20 percent of all employees receive health insurance through the resort, Horn said, but all year-round employees are eligible.
If the resort has to cover even a small portion of seasonal employees, prices at the resort could increase, Blann predicted.
“Our business is a fairly low-margin business -— 60 percent of our expenses are around labor,” he said. “The transition would be difficult.”
The resort now has a reimbursement health plan for long-term seasonal employees, as do many area businesses that depend on steady seasonal workers.
After three years of seasonal work, the resort will compensate an employee for health insurance costs, up to $120 per month.
For small businesses in Teton County, the law could preserve the status quo for the short term.
Companies with fewer than 50 employees will not have to alter health care coverage or pay a penalty. Their employees will be able to retain their insurance plans.
“The employers who offer [health insurance] will attract employees,” Sheue said. “They have sheltered those employees from going out to get their own or from paying the tax.”
Once insurance is required, potential employees may prioritize health coverage when looking for a job.
“Other small businesses will be incentivized to offer health insurance,” Sheue said.
Another possibility is for small businesses to dump insurance coverage and funnel their employees into public exchanges, or health care plans. The unknown is how many people will enter the exchanges.
Hospital stocks across the country shot up after the Supreme Court’s ruling. Similarly, staff at St. John’s trumpeted the short-term benefits the new law could have for the hospital and the community.
Overall, the law should funnel more paying customers into the health care system, said Gary Trauner, St. John’s chief operating officer.
Because more people would be covered by insurance, the hospital would not have to suffer the levels of bad debt and charity care endured today, he said.
St. John’s does not turn patients away and often must absorb the health care costs of those patients who can’t pay.
The hospital’s proposed operating budget for next year predicts $8 million in unreimbursed care. Of that, $5 million would come from bad debts, with another $3 million from charity care. The budget projects $70.6 million in total patient revenue for next year, after unreimbursed care and other deductions are removed.
Trauner also said the act could shift the burden of who really pays for health care costs.
St. John’s patients with insurance and those who can pay for health care are, in effect, charged a premium to cover those who don’t pay.
“It’s not a direct benefit of the hospital, but benefits those who are insured or pay for health care,” he said of how costs would shift under the act.
The number of insured could also increase if Wyoming decides to take federal money to expand Medicaid.
“In the short term, unless you’re a believer that you don’t want the federal government playing in health care, I don’t think there are many negatives for the hospital or the community,” Hochheiser said.
With more people potentially entering the system, Hochheiser did express concern that there may not be enough primary care doctors in the area. He also said costs could become a concern.
“In the long term,” he asked, “where are we going to get the increased dollars that this health plan requires?”
Society is adding more people to the system, but using the same amount of dollars, he said.
“Does it come from reduced services?” he asked. “Or does it come from the amount you pay hospitals and doctors? In the past, we have never reduced services.”
If the costs stay the same, there’s a deficit in the system, he said.
Hochheiser and Trauner will host an hour-long seminar on the Affordable Care Act and its local implications at noon July 19 at St. John’s.
Information on the Affordable Care Act included in this story was taken from the websites of the Kaiser Family Foundation and the United States Health Department as well as from Congressional Research Reports.