Print BCTV: ACA Speedbumps? -- Maryland's Sharfstein; NFIB's Dennis on implementing Affordable Care Act

ACA Speedbumps?

Transcript of BioCentury This Week TV Episode 148




Joshua Sharfstein, M.D., Maryland Secretary of Health and Mental Hygiene

William Dennis, Senior Research Fellow, National Federation of Independent Business




Maryland Small Business Health Options Programs (SHOP)

Maryland Governor Martin O'Malley

Maryland Lt. Governor Anthony G. Brown




Steve Usdin, Senior Editor

Erin McCallister, Senior Writer




STEVE USDIN: Delaying the employer mandate -- speed bump or pothole for the Affordable Care Act? We'll hear from Dr. Joshua Sharfstein, Maryland's top health official, and a strong supporter of the law.


ERIN MCCALLISTER: And from William Dennis, with the National Federation of Independent Business, a strong opponent of Obamacare. I'm Erin McCallister.


STEVE USDIN: And I'm Steve Usdin. Welcome to BioCentury This Week.


NARRATOR: Your trusted source for biotechnology information and analysis. BioCentury This Week.


The Obama administration surprised supporters and opponents alike this month when it announced a one-year delay in the Affordable Care Act's requirement for employers to offer health insurance. Republicans pounced quickly, saying the delay is a signal that Obamacare is not ready for prime time.




The last several months, we've heard the White House repeatedly pledge to Congress and the American people that the President's Affordable Care Act will be ready on schedule. Absolutely. Take it to the bank. Treasury Department's announcement confirms our concerns -- Obamacare is simply not ready.




STEVE USDIN: Democrats said the delay will have little or no practical effect.




-The fact is, Obamacare is largely unaffected by the delay. It was always designed to be built on current coverage, and fill in the gaps. The employer responsibility requirements are just a piece of that puzzle that make up universal coverage.




STEVE USDIN: This week, we'll go beyond the sound bites with two perspectives from the front lines of the employer mandate and the Affordable Care Act. To discuss the implications for small businesses and their employees, William Dennis, Director of the National Federation of Independent Businesses Research Foundation.


Last year, the Supreme Court struck down NFIB's lawsuit against the Affordable Care Act. The Federation has continued to lobby Congress to repeal the law, while preparing its members in each state as Obamacare is readied for launch in January. On the other side, Dr. Joshua Sharfstein, a former Obama administration official whose now Secretary of Maryland's Department of Health. Maryland is one of 17 states to commit to creating a health insurance exchange under the Affordable Care Act.


NFIB's William Dennis will join Erin McCallister later in the show. Right now, I'm pleased to have with us Dr. Joshua Sharfstein, Secretary of Health for the state of Maryland. Dr. Sharfstein, Republicans have said that the delay in the employer mandate shows that Obamacare isn't ready for prime time. Democrats have said it's no big deal.


What is it like for you? You're on the ground in Maryland, trying to make this law real. Does the delay in the employer mandate have an effect on either you at the state planning, or on employers or employees in Maryland?


JOSHUA SHARFSTEIN: First, thanks for having me on, and giving me a chance to talk about this. We're really excited in Maryland for October 1st, 2013, and January 1st, 2014, because we believe that the Affordable Care Act has given Maryland some really great opportunities, both to extend access to health insurance for people who have not had access before meaningfully, and to control costs. I think that this latest issue with the large employer mandate is not at all central to what we're trying to accomplish. It's a mandate that applies in a sector that largely does provide coverage now.


STEVE USDIN: And by that, you mean companies with over 50 employees?


JOSHUA SHARFSTEIN: Right. And I think that by giving a little bit more time so it can be implemented as effectively as possible, that doesn't really cause us any heartburn. The kinds of things that we're working on are getting the systems ready for individuals and small businesses to be able to purchase affordable coverage soon.


STEVE USDIN: So then I want to ask you, you mentioned small businesses. The Affordable Care Act is phenomenally complicated, but one of the complications of it is that you've got the individual market that's going to be in the exchanges, and then you have a separate market called SHOP that's going to be for small businesses to shop for their employees to get it. And so Maryland has done something that's a little different from other states. One, you've delayed enrollment for shop until January. And two, you're going to have multiple policies that are going to be available under shop. Can you talk a little bit about that? Why did you delay it, and what effect is that going to have? And how is shop going to work?


JOSHUA SHARFSTEIN: Sure. I think it's really important to realize that the law is not at all one size fits all and it can be customized for the unique aspects of each state. In Maryland, one of the unique aspects is that we have a pretty successful small group market now where you can get coverage even if you have pre-existing conditions. There about 40,000 businesses, 400,000 employees who are covered through that market. We're expecting really a generally modest growth in the exchange part of the small group market because we have such a strong starting point there in the small group market.


And so the question is, well, what's the value? Where's the value come in for small businesses with the exchange, compared to what they can already get? That may not be the case in other states, but it's already the case in Maryland.


And the answer really boils down to convenience, the ability to compare plans, the access to tax credits that are not available outside for certain businesses, and then a special option that would allow employees to pick plans from different carriers. Right now in our small group market, you have to sign up for Carrier A for all your employees. But when the exchange is running, you'll be able to give your employees a choice if you want. And some companies will want to do that, because it'll help them attract better employees in their mind.


So what we decided was to really launch this with that employee choice aspect, and to really work closely with the broker community in Maryland, and the people whose small businesses now go to purchase insurance. What really made sense strategically is to start in January. We see the small group market as really more of a marathon than a sprint, and we want to really start it off well. And we consulted as we do with the small businesses, brokers, and others. And everybody felt like this was a good choice.


STEVE USDIN: So then, shifting back to the individual market, you've got about 700,000 people in Maryland who are uninsured right now. They're going to be the first ones probably. They're going to be eager to find out how the new markets are going to work. Some people have said that when they log on on October 1st, it's going to be like Expedia, buying airline tickets. And other people compare it to TurboTax, and going through, and the complexity of trying to do your own taxes. What's it going to be more like in Maryland?


JOSHUA SHARFSTEIN: I think it's going to be more like Expedia than TurboTax, but let me try to tell you what we're trying to do. We want people to be able sit down and sign up for insurance, which is going to take them through getting information about whether they qualify for advanced premium tax credits, or for Medicaid. It's going to allow plan selection, both in the exchange and in Medicaid, for family members who might qualify for Medicaid.


It will then allow them to pay that first bill so they know that they're enrolled. And it'll pass that information onto the carriers. So it's a pretty significant amount of work that has to be done.


STEVE USDIN: And will they be able to find out on there, for example, which physicians they might have access to on different plans?


JOSHUA SHARFSTEIN: That's a great question, because we've really worked hard to make that possible. And in fact, we're using our health information exchange in Maryland -- which has a physician registry -- as an anchor, and they're providing information. So we hope, whether it's by October 1st or soon afterwards, for people to be able to type in names of physicians, and then as plans appear, it'll say, all your physicians are in this plan, or some of them are. And it'll tell you so you can use that information to base plan selection.


STEVE USDIN: Great. Well, thank you. We're going to continue our conversation with Dr. Sharfstein in just a moment. First, a look at employer insurance coverage in Maryland.




NARRATOR: You're watching BioCentury This Week.




STEVE USDIN: We're talking about the Affordable Care Act with Dr. Joshua Sharfstein, who's responsible for creating a state insurance exchange in Maryland. Dr. Sharfstein, one of the predicates for the Affordable Care Act is that you're going to get all adults to sign up for it. There's this category of adults who people call the Young Invincibles -- people who are in their 20s who don't think that they need health insurance. How are you going to get them to sign up for health insurance in Maryland?


JOSHUA SHARFSTEIN: It's going to be a combination of activities. I think what we know about Maryland is that people really do recognize the value of insurance, but oftentimes, they haven't felt that it's affordable. And there are some plans that are specially designed for Young Invincibles through the Affordable Care Act. And we hope that the combination of having affordable plans and doing outreach through some unusual channels, will be successful.


STEVE USDIN: So what's an example of an unusual channel?


JOSHUA SHARFSTEIN: Well, I don't mean maybe something that would not knock you off your seat. But for example, we're reaching out to community colleges where there are a lot of people, a lot of young people who are taking classes maybe part-time, and may not have coverage. But if we can make sure that they become aware of the opportunity that they have. We've also been working very closely with a advertising company that has a lot of experience in successfully reaching young people. So we hope through a combination of mechanisms.


I've also heard -- and I think we'll be tapping into this -- that young people do tend to listen to their mothers and fathers from time-to-time. And we want their parents to be calling them, telling them this is a really good thing for them to have. Because even if you're young and think you're invincible, things can happen, and it's really important to have coverage.


STEVE USDIN: So when you talk about things can happen, one of the main reasons -- probably the main reason -- why people wouldn't have insurance -- don't have insurance -- is because they can't afford it. So when they sign up for the exchanges, it's likely that the first criteria they're going to have is, what's the cheapest plan that I can get? The concern that a lot of people have raised is what they call the bronze trap -- the cheapest plans are going to be what they call the bronze plans -- is that people will get a really cheap plan, but then when they actually run into problems and need coverage they're not going to get much help out of it. And that way, they're going to kind of trapped. What would be your response to that?


JOSHUA SHARFSTEIN: I think like a lot of potential scenarios, we're going to have to see how this plays out. For some people, a bronze plan may make a lot of sense. They may want to a pay relatively small amount for a premium, and have some money on the side to use if they really need it. The health savings accounts types plans look a lot like bronze plans when they're purchased.


On the other hand, we have to be careful, particularly for low income individuals, that they're not picking bronze plans, and really making care unaffordable when they get sick. And this is what I mean -- cost sharing support from the federal government is not available to people who choose bronze plans. It's only available to people who choose silver plans, which have a little higher premium. So it's communicating that, and I think people who anticipate health care costs -- or who wouldn't be able to afford the payment if they were to get sick -- and they're eligible for that cost-sharing support, they really need to be picking silver plans. And that'll be part of the training we do for people who are helping to do outreach.


STEVE USDIN: That's a very complicated message to get across people, that if they need more support from the government, they're actually going to have to pay more to get a more expensive plan on their own. Another thing, talking about cost, is the effect that the Affordable Care Act is going to have on the cost of health care for society in general. I think we've talked on the show quite a bit about the fact that the increase in health care costs are not sustainable over the long-term. Do you think that the Affordable Care Act is going to do enough to control costs?


JOSHUA SHARFSTEIN: So this is a very important issue. It's important for me as the Secretary of Health, to Governor O'Malley and Lieutenant Governor Brown. It's important to small businesses and families. The cost of health care is unsustainable. Whether there's the Affordable Care Act or not, you can look at the trends. In fact, if anything, the Affordable Care Act's period has seen some moderation of the trends.


But the big picture is, what are you doing to control costs? We view the Affordable Care Act as a set of tools to help, but it is not by itself, I think, going to guarantee the long-term cost trends that we want. So in Maryland, we've really come together, and we've thought of some creative things that we can do to think differently about health care costs.


And I understand you're going to have someone from the NFIB, the small business organization nationally, on the show. I work a lot with their affiliate in Maryland, and I visited their businesses, and talked to the owners, because we have a shared interest in getting health care costs down. Let me give you one specific example.


STEVE USDIN: Very quickly.


JOSHUA SHARFSTEIN: Sure. We're using data that we get from hospitals and emergency rooms to put together detailed maps of where preventable costs are. And then, we're going to organize our public health system to go out and address, and support individuals, and drive down the costs through prevention.


STEVE USDIN: Maryland's decided to take the government's offer, and expand Medicaid dramatically, and that's a big part of reducing the uninsured there. Anybody who's been on Medicaid, or who has tried to help somebody on Medicaid, knows that it can be really difficult to get good care on Medicaid. What would be your response to that? Is the Medicaid care that people are going to get in Maryland going to be adequate? Or are you perpetuating disparities there?


JOSHUA SHARFSTEIN: Well, I would dispute that characterization, because I think in Maryland -- and each state runs its own Medicaid program -- we have a very strong program. And I think that we've actually been expanding the Medicaid program in Maryland with the leadership of Governor O'Malley even before the Affordable Care Act took effect. We'll see.


We have about a million people enrolled in Medicaid in Maryland. We'll see probably another 150,000. So it's not that dramatic an expansion. But what it allows people to do is have access to primary care and specialty care, and stay healthier so that they don't have those heart attacks and strokes.


And let me give you an example of something where we're trying to pull it all together. Maryland is supporting five health enterprise zones, and those have just launched. And what's going on in the zones is through tax credits, loan repayment, and special grant opportunities to support community led initiatives. We're investing in community health in order to reduce health disparities.


And the fact that Medicaid has been so successful is a very important part of that. We're going to be supporting the growth of a lot more primary care services for Medicaid individuals, as well as others. And I think that what we're hoping is that we're going to be generating savings through fewer heart attacks and strokes and asthma attacks, and be able to reinvest the savings.


One of the ironies that the Lieutenant Governor, who has lead this initiative, has said is that where we have the most intense health disparities, we're also paying the most. Because when the outcomes are bad, it's incredibly expensive. So how can we turn that vicious circle into a virtuous circle?


And the state's really leading by investing in communities. There's going to be one in Prince George's County, one in Saint Mary's County, one in the Eastern Shore, and one in Baltimore. Very, very interesting projects.


STEVE USDIN: So you're investing in those areas. Are you going to do anything to ensure that patients who are in those areas are going to have access to primary care physicians --




STEVE USDIN: -- to specialists, because that's one of the things also that's very difficult through Medicaid.


JOSHUA SHARFSTEIN: Well, through the Affordable Care Act, we are bumping up the primary care reimbursement. And actually, Maryland made a decision to bump up specialty reimbursement in the primary care codes, as well, across the state. So we're actually putting in a fair amount more of state resources to really strengthen the networks, and strengthen the participation in Medicaid. And we're actually hearing very positive feedback from the physician community right now.


STEVE USDIN: Well, thanks, and I hope we get to have you come back on the show, and talk about that, and talk the Affordable Care Act in general in another year. Coming up, the small business perspective from William Dennis of the National Federation of Independent Business. He joins BioCentury Senior Writer Erin McCallister. First, a snapshot of the employer health care coverage, nationwide.






NARRATOR: Now, back to BioCentury This Week.


ERIN MCCALLISTER: The National Federation of Independent Business represents 350,000 small businesses. It has been a persistent critic of the Affordable Care Act, but after failing to block Obamacare at the Supreme Court, the federation is helping members understand their obligations under the law. We are joined today by William Dennis, the director of NFIB's Research Foundation.


So, we just heard about Maryland and the implications of the employer mandate delay for the state, and so I was hoping you could tell us a little bit about what the implications of the delay are on a national level, particularly for small businesses.


WILLIAM DENNIS: Well, the first one, of course, is that the mandate is delayed for one year, and, of course, that affects principally those that have 50 employees or more, that are required to provide, or to offer insurance to their employees. So that tends to be the big one as far smaller firms are concerned.


However, there's another large impact, and that has to do with the delay, for a year, of all the paperwork that's required for those that are under 50 as well -- those with employees that they offer health insurance to. There is going to be a considerable paperwork burden, or at least it would so appear. The rules never were put forward.


And in fact, one of the interesting things is that, technically -- and I say technically -- there was really no delay in the mandate. What there was was a delay in the paperwork, which had the effect of delaying the mandate. So, I think that that's really kind of the first thing. And, quite frankly, there are a lot of small businesses that are quite appreciative of the delay.


There has been precious little information that's gone into the public domain, and particularly, specific information that small business owners can make decisions on. They've been asked to do things, but they haven't been told precisely how. And I think that this has been a major, major problem, and something that has to be taken care of in the next year, or we may be looking at another bad situation one year from now.


ERIN MCCALLISTER: OK, so when you talk about things they're not sure of what to do, can you give an example of what small businesses need to learn more about?


WILLIAM DENNIS: Yeah, surely. The first thing that they're really interested in usually is, am I over, am I under 50 employees, and how then do I calculate that, particularly when I use the formula including part time and full time employees. That generally is the first thing they seem to go to.


But there are other things involved, and one of the big ones, that I call the sleeper -- the one I think a lot of small business owners are going to get hung up on -- is that if they own more than one business, there are times when they're going to have to combine the employees in both business -- a second business, a third business sometimes. They're going to have to combine those employees to see whether they make 50 or not. And very few people, I think, are ready for that one, and that's just one example.

ERIN MCCALLISTER: So right now, those people that own multiple businesses, and aren't providing health insurance under the mandate, they would potentially have to provide health insurance.


WILLIAM DENNIS: Potentially. Yeah, potentially. It has a lot to do with the ownership structures and things of that nature. The problem for them is going to be that it's not going to be easy to find out whether or not they qualify as a single business unit, or whether they can operate as multiple business units. The reason is because the decision was to ultimately put these rules into some very arcane ERISA rules, which has to do with retirement, and there are only a very small number of employee specialty lawyers that know much about that. So, that's going to be a difficult one.


ERIN MCCALLISTER: More on what the Affordable Care Act means for small business and their employers when we return.


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ERIN MCCALLISTER: Now let's get some final thoughts about the Affordable Care Act from William Dennis of the National Federation of Independent Business. Mr. Dennis, could you tell us a little bit more about what some of the areas are where there's maybe still some friction on trying to help small businesses?


WILLIAM DENNIS: Well, first one, probably the most recognized, is the one about full time and part-time employees. How you calculate whether or not you have 50 employees or not to be covered under the mandate itself. But there are a number of other areas. We're trying to help a little bit with the paperwork area, although not quite sure what the rules are going to be, in terms of what's going to be required, the record keeping that's going to be required, that sort of thing. There are the so-called aggregation rules, which we just discussed -- the idea of people who own multiple businesses having to either count them as one or not count them as one. So those are just three examples.


ERIN MCCALLISTER: And then also the businesses are required to tell employees about the Affordable Care Act. Is there some more clarity needed on that?


WILLIAM DENNIS: Oh, absolutely. The rule of the law requires that small businesses inform their employees about the exchange itself, and their potential use of that exchange, and, in fact, quite formal ways. A lot of small business people don't know this. And it's one of those areas which has been kind of gray up until now. And so it's been difficult communicating that, along with a number of other things, to them.


ERIN MCCALLISTER: And what are the penalties if they don't do these things?


WILLIAM DENNIS: I don't know that, to be truthful on that particular area. They're relatively minor. I do know that.


But we've tried to distribute this information in at least three major ways. One is through our normal channels of communication that any major association would have with its members. The second one is we do a series of webinars, where we put experts on the phone, and any member can call in and listen to the webinar and ask questions. And then finally, we advise our state directors, who then, in turn, can talk to the members.


ERIN MCCALLISTER: Thanks for talking to us about that.


WILLIAM DENNIS: Thank you for having me.


ERIN MCCALLISTER: That's our show for this week. Thanks to our guests Dr. Joshua Sharfstein and William Dennis.


Have a thought about today's show? Remember, you can share your thoughts on Twitter. Join the conversation by using the hashtag #BioCenturyTV. For Steve Usdin, I'm Erin McCallister. Thanks for watching.