Jerry Ganoni, president of Humana Small Business and Specialty Benefits
DE PERE — Health care reform sticker shock is coming, a Humana Inc. executive told business leaders Tuesday.
“In 2014, the American public is going to wake up, and when they realize what Obamacare has done to them and what it’s going to cost them, there’s going to be an uproar,” said Jerry Ganoni, president of Humana Small Business and Specialty Benefits. He was speaking at the St. Norbert College CEO Breakfast and Strategy Series.
Ganoni and Humana Vice President Mark Wernicke described a change in the country’s health care system unlike any seen before.
“There were a lot of good things that came about (because of the law), a lot of bad things that came about,” Ganoni said of the Patient Protection and Affordable Care Act, also referred to as Obamacare.
The law, which begins to more fully take effect on Jan. 1, 2014, will increase accessibility for citizens, “but it did nothing, absolutely nothing, to address rising health care costs,” Ganoni said.
Employers and employees, as well as uninsured people, will have important choices to make in the coming months. Employers should engage their attorneys and tax consultants to figure out the impacts their decisions will have, Ganoni said, and “employees are going to get a lot more knowledgeable about health care than they ever have before.”
A survey by the Towers Watson consulting firm indicated about 45 percent of employers plan to offer health care plans much as they have, 5 percent will drop health care and rest are somewhere in between, he said.
Increasingly, employers are paying defined contributions — a set amount — toward employee health insurance premiums instead of a percentage of those premiums. States, the federal government and insurance companies are developing insurance exchanges — marketplaces where people can buy insurance on their own.
“We believe we are moving toward this retail world,” Ganoni said.
The implementation of community rating means that younger, healthier people will pay higher premiums than they do now, while some older, less healthy people will pay less than they do now. Under community rating, the ratio from highest to lowest premium costs based on age can be no more than 3 to 1.
A number of taxes will go into effect as well, most of which will be passed on to consumers. They include:
• A health insurance premium tax of about 3 percent in 2014. According to America’s Health Insurance Plans, a trade organization, the amount of the tax will be $8 billion in 2014, increasing to $14.3 billion in 2018, and increase based on premium trend thereafter. The Congressional Budget Office has said that this tax will be “largely passed through to consumers in the form of higher premiums.”
• A reinsurance tax of $5.25 per health plan member per month.
• A Comparative Effectiveness Research Fee of $2 per person.
There will be many more rules and changes. Federal regulators are moving through them slowly. Employers and consumers will have to remain flexible and open to change to keep up.
“The majority of you are going to be affected by this law in some way,” Ganoni said. “It’s going to cause a lot of chaos.”
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