News Column

Tough Health Care Choices Await Georgia Businesses

July 2, 2012

Greg Bluestein and Carrie Teegardin

The Supreme Court decision to uphold the health care law sent almost every business in the state -- from Fortune 500 companies to mom-and-pop dry cleaners -- scrambling last week to understand how the law might reshape their operations.

Many Georgia business owners dread the law and worry that higher costs will make it difficult to hire additional workers and grow their companies. Others hope it will offer them new, more affordable options to get health insurance for themselves and their workers.

"For employers in Georgia, they're all going to have to make decisions about how they plan to comply with this law," said Cindy Gillespie, a health care policy specialist with McKenna Long & Aldridge. "They're all going to have to do something."

Julie Haley, chief executive of an information technology company in Alpharetta called Edge Solutions, says she paid exorbitant insurance rates to cover employees when she started her company in 2008, and she knew she had to make a change a year later when her premiums shot up 33 percent.

"We're lucky we stayed in business," Haley said.

She switched to a professional employer organization that insures her company's 25 employees that is cheaper but that also includes human resources services that Haley doesn't need. She hopes the health insurance exchanges set up by the overhaul will lead to lower insurance costs.

"The people who are afraid are the misinformed who have been listening to too much fear-mongering," she said. "You can't keep growing jobs here with the rising cost of health care. Our premiums are so expensive now because we are paying for people without health insurance."

Haley said she thinks her costs will drop enough starting in 2014, when many of the changes take effect, that she'll be able to hire more employees.

"If we can bring down our health care cost, we'll hire more IT specialists and technical engineers. It will definitely help me grow," she said. "We'll be able to compete better against our large competitors because it's not going to be an unequal burden."

Not as optimistic

Others, particularly those already suffering from the bad economy, are pessimistic about the changes. Mike Sullivan, owner of Southeast Sealing Inc., has watched his Conyers company dwindle from 38 to 20 employees as the construction industry has struggled. He sees last week's ruling as another unnecessary burden that leads to higher premiums and makes him more cautious about hiring new staffers.

"There's no way that it's good news for the small employers, the guys in my situation," he said. "This will have huge implications because of the precarious situation we're in. We're not cash-flush right now. And if you start sending me a few more bills from Washington, it won't help."

The centerpiece of the law, which requires most individuals to have health insurance or pay a penalty, could extend coverage to many of the estimated 50 million Americans who are uninsured. Businesses will face a range of new options and regulations spurring them to insure their employees and dictating what their health plans must include.

Small, large firms

The smallest businesses -- those with fewer than 50 full-time employees -- are off the hook. They are not subject to penalties for failing to offer their employees a health plan.

The law offers tax credits for providing coverage in companies with fewer than 25 employees and average wages of less than $50,000. Those companies also can use new state-based insurance exchanges to cover their employees.

Larger firms -- those with 50 or more full-time employees -- can face penalties if they don't offer the coverage. Some employers could drop insurance as a benefit because of the costs, deciding that it's cheaper to pay a $2,000 penalty per worker than it would be to pay for insurance.

"Some companies will pay the penalty, though I don't know who that will be," said John Bardis, founder of MedAssets, a health care consulting firm. "If you're a corporation that has 100,000 employees, you've got to ask yourself the question: What is in your best economic interest? Everyone has tough decisions to make."

Georgia Attorney General Sam Olens, who led the state's legal challenge of the law, predicted that the Affordable Care Act would be a "huge job killer" because of its requirements, penalties and taxes. He said it would inhibit hiring by small employers and lead large employers to drop their health plans.

William Custer, a health care expert at Georgia State University, said large employers who are voluntarily offering health plans now will keep doing so.

"Large employers are not going to drop coverage in the near term," he said. "It makes no sense."

Companies provide health benefits to attract employees, Custer said. Employers would send employees to shop for coverage on the insurance exchange only if that option is better for their workers than the company plan, he said.

All the worry and preparation may be for naught. It's no secret that changes could be coming to the health care rules if Republicans dominate in the November elections, so companies are getting ready for an overhaul knowing it might not stick.

"All of the businesses know that the elections can change everything in November," Gillespie said. "They are set up to pull the trigger in 2013, knowing that it could turn on a dime."

Source: (c)2012 The Atlanta Journal-Constitution (Atlanta, Ga.)

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