NORTH BAY -- With the federal health overhaul hanging in the balance of what will most certainly be a politically charged U.S. Supreme Court decision, insurance brokers in the North Bay offered a familiar refrain to employers on what changes, if any, they should make to their health plans: wait and see and stay the course.
Few can confidently predict the outcome of the court's hearings held two weeks ago on whether the Affordable Care Act, and its individual mandate, is constitutional. The court will decide if the mandate -- which insurers say is necessary to spread the risk of millions of new entrants to the health care system -- does or does not violate the U.S. Commerce Clause. A decision is expected sometime in June.
"As an employer I would probably wait and see. I would just keep going as I was going," said Bud Martin, senior vice president of employee benefits for Wells Fargo Insurance Services in the North Bay. "We're only talking three months here, and whether any part will be thrown out is kind of up in the air."
Victor McKnight, a principal and broker with Edgewood Partners Insurance Center, or EPIC, in Petaluma, offered a similar prognosis.
"Clients are really holding tight with any changes," he said. "June will be here before you know it. Really, most employers were waiting on any major changes this year and were waiting for guidance from the Administration."
Without the mandate, which would require individuals to purchase health insurance or pay a fine, the insurance industry has largely said that treating some 32 million new patients and eliminating "preexisting condition" practices would drive up rates, since the pool of patients would be less healthy, and thus more expensive to treat. But one key question is whether or not the mandate can be scrapped while the rest of the law is upheld or if the entire law is struck down.
Key to the individual mandate is whether or not it adequately defines "essential health benefits," said Jordan Shields, a broker and head of Jordan Shields Insurance office in Novato. Mr. Shields also said he was advising clients to stay the course, until there is more clarity on the law.
"What we've been telling clients is the same thing we were telling them a year ago -- we'll see," Mr. Shields said. Regarding the mandate, he added: "Even if they have a mandate, it has to be comprised of essential health benefits."
So what does all this mean for employers?
"Continued uncertainty until we hear from the Supreme Court or the states," said Mr. Martin of Wells Fargo, who added yet another familiar refrain for employers: "Wait and see, prices will increase and many of the uninsured will drive up costs."
Mr. Shields agreed, adding that if the mandate were dropped, rates would rise. "If carriers raise the rates, they will have justification to do so," he said.
In the meantime, employers are exploring as many options as possible to brace for whatever impact the law will or will not have, Mr. McKnight of EPIC said.
"They are looking at ways to control costs and partial self funding is becoming a popular method for groups as small as 25 employees. If the ACA remains then this will become a popular way to avoid some taxes, reduce premium increases and avoid many of the government mandated benefits."
Despite such uncertainty, Mr. Martin said employers should still be thinking ahead, even if there is no clear path to take.
"We're going to continue with health care reform, especially in California, if something is thrown out. I think California employers need to keep moving," he said.
If the Supreme Court tosses out the law, many insurance and health officials have speculated that states could take up their own reform initiatives, particularly California, which has visited the issue in the past. Employers, Mr. Martin said, should be mindful of that.
Mr. McKnight also said statewide reforms are a strong possibility.
"Legislators in Sacramento are discussing a state mandate and requiring that insurance carriers accept all applicants," he said. "There is a concern that without premium subsidies from the government many lower to middle income individuals will not be willing or able to enroll thus not significantly increasing enrollment."
Ultimately, any decision by the Supreme Court will have a major impact on all involved parties, Mr. Shields said.
"No matter what (the Supreme Court Justices) do, it will have an economic impact across the spectrum," he said. "This affects everybody in the U.S., whether they know it or not."
