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Thursday, Mar 28, 2024
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A Dose of Uncertainty

If anyone could predict how President Barack Obama’s health care reform law is going to affect San Diego companies’ bottom lines, it might be Craig Gussin.

But these days, the president of Auerbach & Gussin Insurance and Financial Services Inc. in La Jolla is just as puzzled as everyone else.

“My clients are asking me ‘How will my costs change?’ and my response to them is ‘I don’t know,’ ” said Gussin, who serves as the 2011-2012 president of the San Diego Association of Health Underwriters, a nonprofit trade group. “When you go to a baseball game, you know the rules. But with health care reform, the rules are changing every day.”

In January 2014, major provisions of the Affordable Care Act are set to take effect. However, with so many details of the law to be worked out, local businesses are wondering what they can do, if anything, to prepare for potential changes.

It doesn’t help that the individual insurance mandate, a cornerstone of the health care reform law, is being challenged in federal court, said Gussin, who serves about 200 corporate and small-business clients at Auerbach & Gussin.

A U.S. appeals court in mid-August ruled that it’s unconstitutional for the government to require all Americans to buy health insurance; the decision is now expected to head to the Supreme Court for consideration. The mandate is among many components of the law set to go into effect in 2014.

On top of that, health reform has been a politically divisive issue, with Republicans overwhelmingly critical of the March 2010 law. As a presidential election looms in November 2012, business leaders wonder what will happen if there’s a change at the White House, Gussin said.

Uncertainty Abounds

“There’s so much uncertainty about what health reform will look like in 2014,” said Ruben Barrales, CEO at the San Diego Regional Chamber of Commerce. “A lot of small businesses we work with aren’t looking at it as an immediate issue. Their main concern is the recession and how they can reduce costs today. They’re checking with insurance providers to find out what they can do right now.”

He noted that California has been ahead of the game on setting up its statewide insurance exchange, as is required for all states by 2014. Exchanges are envisioned as a one-stop shop for comparing insurance plans based on price and benefits. They’re also meant to serve as a way for uninsured individuals and small businesses to band together to negotiate lower rates.

But even though California was first in the nation to enact legislation to form its exchange, to be called the California Health Benefit Exchange, “it’s still not clear what these exchanges will look like and how they’ll work,” Barrales said.

Indeed, the board for California’s exchange, which met for the first time in April, is still working out details such as how the exchange will be staffed and what its mission statement will be.

Affordable Care or Not?

Under the Affordable Care Act, employers aren’t required to offer insurance to their workers. However, employers with fewer than 50 workers could be eligible to receive tax incentives and credits for offering health care coverage.

Meanwhile, employers with 50 or more full-time workers that don’t offer coverage will be fined $2,000 per full-time employee annually, excluding the first 30 workers.

Those employers also would be hit with a fine for “unaffordable coverage” if even one employee seeks a federal subsidy to pay for health insurance, according to the law.

Several of the area’s most prominent companies — including Qualcomm Inc., San Diego’s largest for-profit employer with about 10,500 local employees, and the Hotel del Coronado, which employs about 1,200 workers — declined to talk about their health care reform preparations or did not respond to a request for an interview by last week’s deadline.

“I think the general business community is just trying to figure out what health care reform means because it hasn’t been defined,” said Michael Murphy, president and CEO of the nonprofit Sharp HealthCare, one of the county’s largest employers with nearly 15,000 employees. “Everybody is meeting with their brokers and evaluating what they should be doing as employers to put themselves in the best position.”

He noted that some of the reforms already have gone into effect, including the requirement that dependent children can stay on a parent’s health insurance policy until age 26.

Murphy said that Sharp isn’t contemplating any major changes to its health benefits, and he’s hopeful that the law will work as intended, reducing the expense of health care. “Every company is cautiously hopeful that their costs will go down, but they’re waiting to see the evidence that that will happen,” Murphy said. “So far, all that’s been required by the law is adding benefits, which has actually increased costs.”

Aiming to Reduce Expenses

Gussin is among those waiting for signs that the Affordable Care Act will lead to more affordable rates. For now, he’s bombarded with clients who are exploring higher-deductible plans and other avenues for reducing their current employee insurance expenses.

“California already has some of the lowest insurance rates in the country,” Gussin said. “Nothing that I’ve seen in the bill does anything to reduce costs. I just don’t know how we can expand coverage to everyone and not see rates go up, especially with an aging population.”

Without a government guarantee that employers’ insurance costs will go down, Gussin said that business owners should safeguard themselves by projecting for more rate increases, in line with what they’ve seen in recent years.

“My clients are looking for ways to cut costs from other areas of the business, so they’re prepared,” he said.

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