ObamaCare’s (ACA) Impact on the Tech Sector
Overview of âObama Careâ
The adoption of the Federal Patient Protection and Affordable Care Act (ACA) legislation is the most comprehensive reform of the U.S. medical system in recent memory. The ACA transforms the non-group insurance market in the United States, mandates that most residents have health insurance, significantly expands public insurance and subsidizes private insurance coverage, raises revenues from a variety of new taxes and reduces and reorganizes spending under the nationâs largest health insurance plan, Medicare.
Implementation of ACA is scheduled to unfold over the next few years and involves all the major health care stakeholders, including the federal and state governments, as well as employers, insurers and health care providers.
ACA makes numerous changes in the way health care is financed, organized and delivered. Among its many new provisions, it requires state-based insurance exchanges to be established by 2014. These state-based exchanges are electronic/web-based platforms that provide individuals with the ability to purchase insurance, regardless of existing health conditions or financial situation. This is achieved through federal subsidies providing that certain conditions are met.
The primary goal of ACA is to increase access to affordable health insurance for the millions of Americans without coverage and to make health insurance more affordable for those already covered. As such, ACA is projected to have a significant impact on federal spending and revenues as the government will, in effect, subsidize and/or give insurance to our under-served/poor populations. The increased costs of expanding public and private health insurance are expected to be offset by revenues from new taxes as well as fees and costs savings associated with delivery system reforms.
The Expected Losers
Companies â In order to offset the increased costs of ACA, employers will incur both new taxes and fees in conjunction with procuring health insurance for their employees. Additionally, several of the new ACA provisions change the existing laws and mandate that employers offer health insurance. The financial impact of ACA has been greatly debated; however, it is widely accepted that companies will incur significant increases in the cost of health care and the administrative time they spend in complying with the laws.
Employees in âTargetedâ Industries â ACA has levied more stringent requirements for employers to offer health insurance and includes penalties in situations where basic standards have not been met. This is particularly relevant to industries that lend themselves to part-time or seasonal work like restaurants, agriculture, tourism, etc. The goal was to provide the employees within these industries access to affordable health insurance, which they typically did not receive in the old paradigm. The theory is fine, the law is not. ACA set minimum working requirements (hours per week, period of service) for those employees to be eligible for benefits. As a response to this, employers (rather than paying for insurance or the penalties) have and will modify the working hours and service periods of their employees so they are not subject to the requirements of ACA. This will result in less work and lower earning power for these employees.
Impact of ACA on Tech Companies and Professionals
Changes in Buying Patterns Related to ACA â One of the core principles of ACA is âaffordabilityâ and the notion that millions of Americans canât get needed health care because of their financial situation. This basic principle, in most situations, is not relevant to tech companies and professionals because of the high wages paid and underlying economic strength of the industry. In fact, the tech industry not only pays the highest wages of any industry in Washington, the demand for full-time, highly compensated workers, far exceeds the supply. The underlying economics, therefore, do not suggest that employers will modify work hours/service periods to avoid ACA because throughput and staffing are core challenges.
Tech Industry will Subsidize ACA â Because of the economic strength of the tech industry and the fight to recruit and retain the best talent available, it is expected that tech companies will continue to offer comprehensive and competitive health benefits to their employees. This results in higher premiums, on average, than other industries. Further, unlike seasonal and retail businesses, tech companies have minimal motivation to manipulate headcount to avoid taxes/penalties because of the labor supply and throughput issues. Â Lastly, the rapidly-growing tech industry, and its highly paid professionals, will be funding ACA shortfalls through tax revenues associated with increased headcount.
WTIA Health Trust is a SPECTACULAR Solution
The WTIA Health Trust (âTrustâ) offers the most comprehensive plans at the best prices for tech companies, which will help offset the fees and penalties associated with the ACA.
It has been recognized as a bona fide group Association Health Plan (AHP), which assures that it will continue to serve its eligible members beyond 2014 implementation of ACA. The bona fide status of the WTIA allows tech companies to be evaluated as a âgroupâ. The group status allows the carriers to consider more factors in the risk assessment process which has a direct pricing impact.
The related pricing primacy and discounts offered to WTIA members under the WTIA group plan are significant and save, even very small tech companies, thousands of dollars per year. Most importantly, the WTIA Health Trust includes access to other WTIA services and programs. The WTIA is the only health insurance solution in the marketplace that provides employees with access to a vibrant and active tech community.
Interested in learning more?
If you have questions related to ACA legislation, health insurance, and other needed business services, the WTIA can help. Please contact the following WTIA representatives with further inquiries:
Chief Operating Officer (COO)
Membership Account Manager