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Mercer

When the Affordable Care Act (ACA) raised the maximum allowable wellness program incentives from 20% to 30% of an employee’s total premium — and to 50% as an incentive for not using tobacco — it seemed to signal that the federal government approved of employers’ taking a more aggressive approach to improving workforce health.

 

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The passage of the Affordable Care Act (ACA) five years ago has had a tangible effect on the stop-loss premiums paid by self-funded health plans. The ACA’s elimination of annual and lifetime dollar limits and pre-existing conditions and the provision authorizing coverage of clinical trials have exposed the stop-loss carriers to greater risk. In response, employers have seen, on average, about a 15% increase in stop-loss premiums over the last three years.

 

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Today is a big day! Five years ago, the ACA was signed into law. For most people, it may not have been the type of momentous event that has them remembering where they were when it happened – although I certainly do! I was on vacation and had just finished a round of golf when I reached for my BlackBerry and saw the news. It was definitely the end of my vacation and the start of a journey for all of us. Many, many hours have been spent by employers understanding what the law entails and the implications of all the guidance, regulations, delays, and FAQs that followed. Compliance has not been easy.

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While it’s difficult to measure the Affordable Care Act’s impact on provider payment reform, we’ve seen sweeping changes in the financing and delivery of health care among commercial health insurance carriers, as well as parallels in Medicare.

 

Historically, providers have been reimbursed on a fee-for-service basis. Under this model, there are no meaningful incentives for providers to limit supply. Volume drives revenue and compensation increases as more complicated procedures are performed. But the system is clearly evolving.

 

 

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Private benefit exchanges and the Affordable Care Act (ACA) are tied together in several ways. Most obviously, the ACA introduced the concept of the public health exchange. But it also created new challenges for employer health plan sponsors that called for new solutions. It added serious administrative complexity, as employers were required to comply with new tracking and reporting requirements. It added cost by imposing new standards for plan value and coverages. At the same time, it greatly increased the need for employers to reduce cost by creating a future 40% excise tax on high-cost plans. For the many employers that see their benefit program as a key tool to attract and retain talent, this has meant rethinking fundamental strategies.

 

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