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Wed May 14, 2014
Obamacare Prompts Firm To Consider Dropping Its Health Plan
Originally published on Wed May 14, 2014 11:09 am
AmeriMark Direct founded its catalog business in Cleveland in the 1960s, and for decades, everyone assumed that health insurance came with the job.
These days, the 700-employee company doesn't assume anything.
The traditional mail-order catalog company sells a broad selection of products — from magnetic "fashion bracelets" and patio dresses to sexual health aids and religious-themed blankets.
The business model depends on people like associate Kathy Miller, at the company's call center, closing a sale without taking a breath: "You get a free gift today — it's a pair of knee-highs — and your total includes the merchandise, postage and handling, and the replacement fee," she says, "so it will come to $37.97, and I completed your order, so you're all set."
Rising health care costs could put a damper on Miller's cheery tone, however. AmeriMark's human resources director, Greg Lyons, says the Affordable Care Act is adding to the company's costs. "It probably affects our premiums in the neighborhood of 8 percent," he says.
Among the things that go into that 8 percent are a handful of fees and taxes that help pay for the health law. In exchange, consumers gain benefits like certain guaranteed benefits and improved coverage.
AmeriMark, like most businesses, has been coping with rising health insurance premiums for years. This year, the company's initial estimate from a broker was a 30 percent increase in the price of premiums if they stayed with the same insurance provider. Lyons says they shopped around, chose a new company and changed some of the policy's benefits — such as increasing the deductibles and copays that employees pay as their contribution to their own health coverage. Such changes in plans have become increasingly common nationally in recent years as annual increases in health care premiums have become normal.
For many medium-sized companies, like AmeriMark, the new costs of the Affordable Care Act are an added burden on top of the health insurance premiums that have been rising for years. The largest of the new Obamacare costs is the health insurance provider tax, or HIT. It's a tax that the federal government charges insurance companies, and the size of the fee depends on how many people the insurer is covering.
Insurers then pass that cost on to employers. And employers, in turn, pass some or all of the cost on to their workers.
It's a kind of trickle-down sales tax, according to Clare Krusing, a spokesperson for America's Health Insurance Plans, an industry trade group.
"So, like any sales tax on anything you buy, it does raise the cost of that particular service," Krusing says. "So we are seeing that consumers are paying more in the form of higher premiums as the result of this tax."
And, as part of the Affordable Care Act, the fees help cover the health insurance expenses of other people — "the expansion of Medicaid and providing subsidies for low- and middle-income people to help them pay for health insurance," says Larry Levitt, senior vice president of Kaiser Family Foundation. "Congress needed to find some way to cover these costs."
Hoping to control health costs in his own firm, AmeriMark's president, Louis Giesler, says there will be a full-court press on promoting health and wellness at AmeriMark. Employees will have their blood pressure, weight and cholesterol checked annually, to "make them aware of some health-related challenges that they may not know about," he says.
If those screenings flag any health concerns, says Giesler, "we'll try to put tools in their hands, or on their computer screens, or in their mailboxes to help them better understand their situation and manage it," he says.
For example, some employees may have not seen a doctor recently for a wellness check, so may not realize their blood pressure is high. If a biometric screening reveals that, Giesler says, it will be up to the employee to take action — to visit a doctor and get educated about the condition.
AmeriMark's workers will also be offered incentives to help them quit smoking and lose weight. And, finally, AmeriMark will be asking its employees to share in paying some of the costs of these new programs.
Giesler says the company debated dropping health insurance for its employees — a step that, beginning in 2015, would result in an expensive penalty.
In the end, the firm decided to keep providing insurance. But that decision may change in the future, he says, if costs continue to climb.
This story is part of a reporting partnership with NPR, WCPN and Kaiser Health News. Kaiser Health News is an editorially independent program of the Kaiser Family Foundation.
STEVE INSKEEP, HOST:
When businesses are feeling the Affordable Care Act, size matters. The new health care law says companies with over 50 employees must offer insurance by next year. Most companies already do, including AmeriMark Direct, which employs about 700 people.
But that comes at a price, says Sarah Jane Tribble of WCPN in Cleveland reports.
SARAH JANE TRIBBLE, BYLINE: AmeriMark Direct is an old-fashioned mail order catalog company in Cleveland that's been around since the 1960s. Its kitschy magazines- with products like magnetic fashion bracelets, patio dresses, sexual health aides and religious-themed blankets arrive on doorsteps nationwide. The business model depends on employees like Kathy Miller chatting up customers.
(SOUNDBITE OF CHATTER)
KATHY MILLER: You get a free gift today it's a pair of knee highs and your total includes the merchandise, postage and handling, so it will come to $37.97. You're all set.
TRIBBLE: Rising health care costs could put a damper on that cheery tone. AmeriMark's HR director Greg Lyons says the Affordable Care Act will add to the company's costs.
GREG LYONS: It probably affects our premiums in the neighborhood of eight percent.
TRIBBLE: Among the things that go into that eight percent are a handful of fees and taxes that help pay for the implementation of federal reform. In exchange, consumers gain benefits like guaranteed and improved coverage.
The largest of these fees for many medium-sized companies, like AmeriMark, is the health insurance provider tax - or hit. This is a tax that the federal government charges insurance companies. The size of the fee depends on how many people are being insured.
To cover that extra fee, insurance companies pass the cost on to employers and employers, in turn, pass some or all of the cost on to employees. It's a kind of trickle down fee, as Clare Krusing explains. She's a spokesperson for America's Health Insurance Plans, an insurance industry trade group.
CLARE KRUSING: The health insurance tax is essentially a sales tax on health coverage. So like any sales tax on anything you buy, it does raise the cost of that particular service. So we are seeing that consumers are paying more in the form of higher premiums as the result of this tax.
TRIBBLE: And the Affordable Care Act includes a lot of new expenses for the federal government, says Larry Levitt, of the Kaiser Family Foundation.
LARRY LEVITT: The expansion of Medicaid and providing subsidies to low and middle income people to help them pay for health insurance and Congress needed to find some way to cover these costs.
TRIBBLE: This year, federal officials plan to collect $8 billion from the fee. The Congressional Budget Office estimates that will rise to more than $14 billion in 2018. And the amount is predicted to increase as more people are insured.
LOUIS GIESLER: The point of this law is to get more people insured and that will mean more revenues and higher profits for insurance companies, so that certainly offsets some of the effect of this new tax.
TRIBBLE: To help control costs, AmeriMark's president, Louis Giesler, says there will be a full-court press on promoting health and wellness. Employees will have their blood pressure, weight and cholesterol checked annually.
GIESLER: So we're going to be doing a biometric screening program for our associates to give them some feedback and make them aware of health-related challenges that they may not know about. And if those challenges exist, we'll try to put tools in their hands or on their computer screens or in their mailboxes to help them better understand their situations and manage it.
TRIBBLE: AmeriMark's workers will also be offered incentives to help them quit smoking and to lose weight. And, finally, AmeriMark will be asking its employees to share in paying some of the costs of the Affordable Care Act.
Giesler says the company debated dropping health insurance for its employees and moving them to the federal exchange, and take the penalty that would then come with that.
It was a short debate this year. The company decided to keep providing insurance. But that decision may change if costs continue to climb.
For NPR News, I'm Sarah Jane Tribble in Cleveland.
INSKEEP: This story is part of a reporting partnership between NPR, WCPN and Kaiser Health News. Transcript provided by NPR, Copyright NPR.