Tuesday's kickoff of the Obamacare marketplaces is aimed at less than 15 percent of Nebraska and Iowa residents — people who couldn't or didn't want to buy health insurance before.
That leaves the remaining 85 percent.
This includes people covered by group plans through their employers. For most of them, the biggest change for 2014 will be familiar: costs rising in a range that six health plan experts in the region estimate at 6 percent to 15 percent.
The increases are mostly because of higher medical prices and more use of medical services, the experts say, although the Affordable Care Act will contribute between 1 and 5 percentage points to the rise.
Bret Sesker, a principal with Omaha benefits firm SilverStone Group, said he expects medical costs alone — increased use and price inflation — to rise between 8 percent and 11 percent for 2014.
For employer groups, actual percentage increases will vary widely, from nearly zero to increases in the high teens, with at least part of the cost passed on to employees.
Otherwise, most employer plan features are expected to be stable in 2014. Businesses for the most part will continue their long practice of offering health coverage to employees as a benefit intended to attract and keep good people on staff, and most employers already have adopted the main features of Obamacare or have included them for years.
“In the big scheme, I don't see this dramatically impacting the way the employers are acting,” said Omaha attorney Craig Kovarik, who advises businesses on health plans.
For example, most employers have “open enrollment” periods each year where employees can sign up for coverage regardless of their health history. That meets the Affordable Care Act's ban on rejecting insurance applicants who have pre-existing medical conditions.
The law also prohibits lifetime benefit caps and sets annual maximum out-of-pocket costs at $6,350 for an individual and $12,700 for a family. Many group policies already have lower limits on annual costs.
And many businesses, in their attempts to curb cost increases over the years, have stressed wellness plans and smoking cessation — the kinds of preventive measures emphasized in Obamacare.
Aside from cost increases, the group policies that cover the average employee will contain similar benefits as in recent years, said Jerome Rewolinski, director of account management for Blue Cross Blue Shield of Nebraska.
Even though the group plans aren't required to have all of the “essential benefits” of the Obamacare marketplace policies, he said, many group plans already include most of the same benefits.
“The key,” Rewolinski said, “is if you're covered by a company plan today, you can still remain in that plan — and in most cases you'll be best served by having that employer coverage,” because employers typically pay a big share of the cost.
Among the law's new features that do affect group insurance plans: a $63-a-year transitional reinsurance fee per covered person, a health insurance tax (estimated to increase premiums by as much as 2.5 percent annually) and a patient-centered outcomes research fee of $2 per covered person.
The insurance tax won't hit employers who don't buy insurance but who instead pay their employees' claims through a health plan administrator. That's called a self-funded plan or self-insurance, and more businesses are considering it partly because of the new tax.
The most important factor in group costs, said the experts interviewed, is not Obamacare but the claims experience of group members.
Duncan Aviation of Lincoln is paying about $200,000 a year in fees from the Affordable Care Act, but employees will pay only a 2 percent increase in premiums next year, the same as this year. Medical claims have been flat, said Michael Cox, vice president of human resources. That 2 percent is just to “stay ahead” in case of unexpected large claims in future years.
Employees enrolled in Duncan's high-deductible plan with health savings accounts have had no increase in premiums since the plan began three years ago. The company pays 75 percent of premiums for the health plans and hasn't cut benefits in recent years.
Cox credits more than a decade of Duncan's emphasis on wellness, including on-site clinics at the 2,000-employee company's two locations and financial incentives for people to take care of their health.
“I think it's a cumulative effect,” Cox said. “It's not something in one year or two years or five years where you see huge dividends. It's more of a long-term strategy. It's part of the culture. People think about it.”
Some employees of Royal Composites, an aircraft parts manufacturer from Minden, Neb., will benefit from the Affordable Care Act because they can use its marketplace instead of paying high rates through the state's insurance pool for people with high-risk medical conditions.
Phillip Gill, president and CEO, said he will double the company's wellness budget in 2014 to try to control costs, but he expects another 10 percent increase.
So far he doesn't offer insurance for his 140 employees, instead reimbursing them for policies they buy on their own.
The law's penalty for employers who don't offer insurance has been delayed a year, and Gill is thinking about offering a group plan but is unsure.
Meanwhile, he's offering incentives to workers who take part in the wellness program.
“That's the only leverage we have, is people working to get a little bit healthier,” he said. “Stop smoking and quit eating sugar, and everybody would be in good shape — but that's easier said than done. We're trying to make it a positive thing.”
Sesker, from SilverStone, said businesses that emphasize wellness can save on medical costs. “They can beat those claim trends,” he said. “It takes a while to really have an impact, but it's worth the time and effort.”
The Affordable Care Act includes some efforts to reduce health care costs. Any significant cost reductions are more likely to come from the health care industry itself, said Kim Lobato, senior vice president for AON Risk Services in Omaha.
Payment methods for medical providers are changing to emphasize care of patients, for example.
“There isn't anything yet that has really impacted (medical) inflation,” Lobato said. “There's a lot of cost-shifting that goes on,” with expenses being passed to employers and employees.
Even so, he said, “Having group insurance is a heck of a lot easier for me as an employee than it is to navigate the exchange market and deal with insurance on my own. It is a real benefit to employees, and employees will recognize that in competitive hiring.”
Omaha restaurant owner Greg Cutchall said he's waiting for 2014 bids on his company's 70-member, self-insured health plan and likely will keep it in place, although he may ask some employees to test the marketplace. “It might make sense for a handful (to use the marketplace) but may not make sense for another group,” he said. “I don't think anything there is a win-win.”
Mark Whiting, principal with Mercer Health & Benefits of Kansas City, Mo., said some employers will try to blame the new law for all of the 2014 increases, and all are looking for ways to control health costs.
“Employers are looking for home runs,” Whiting said, when the only real options are the occasional bunt, stolen base and sacrifice fly — small steps that may bring costs down a little.
“They want to know what to do to take out 7 to 10 percent of costs, but that doesn't exist.”