Nearly 200,000 Houstonians signed up for health insurance through the federal Health Insurance Marketplace by April 2014 following the implementation of the Affordable Care Act.

However, as the employer shared responsibility mandate is set to affect businesses in January, more than 1 million residents are still uninsured in the Greater Houston area.

With open enrollment scheduled to begin Nov. 15, the ACA will continue to mold and reshape health care in the region in 2015.

Employer mandate

Starting in 2015, the employer shared responsibility mandate requires employers of 100 or more full-time equivalent employees—or employees that work an average of at least 30 hours per week—to provide health insurance coverage to 70 percent of all full-time workers, according to the Treasury Department.

Midsized employers of 50-99 full-time equivalent employees are already preparing for the same challenge as the mandate for employers of that size goes into effect Jan. 1, 2016.

Andrew Malahowski, area senior vice president compliance counsel for Gallagher Benefit Services, which has offices in The Woodlands, said employers that do not offer coverage are forced to pay a $2,000 penalty for every full-time employee who is not offered coverage. Employers that offer coverage that does not meet the ACA's minimum requirements are subject to a $3,000 fine for every employee who receives a premium tax credit through the Health Insurance Marketplace, he said.

Malahowski, who represents about 5,500 employers across several states including Texas, said employers in the Greater Houston area are concerned about the effects the mandate could have on their businesses.

"I would say that [the] compliance issue, more than any other, is at the forefront of our clients' minds," he said.

Although Malahowski said many of his clients already offer health insurance to their employees, there is some concern about the costs of insuring those part-time employees who work 30-plus hours per week and are now designated as full-time employees by the ACA.

"It may be the case that a lot of our clients offer insurance to somebody, but the question is do they offer insurance to all employees considered full time by the Affordable Care Act," he said.

Malahowski said offering coverage to an employee is likely going to be more expensive than the $2,000 fine to not offer coverage at all. It is possible to offer coverage plans that would cost less than $2,000, but the plans might not meet all the requirements of the ACA.

Some employers are faced with making tough business decisions on whether to cut employees, hours or insurance coverage, he said.

"If an employer is exposed to tax penalties that they never had before or they have to offer coverage they have never had to before, that affects the employer's bottom line, and whenever the employer's bottom line is affected, they will have to make business decisions," Malahowski said. "We've seen some employers who have attempted to restructure their workforces to attempt to meet the rules. But it is more of a hypothetical at this point."

Sandy Krug, owner of Classic Hair salon locations in Cypress, Tomball, The Woodlands and Spring, closed her fifth location in Lakewood in 2014. Although she said the location was struggling, Krug said she was also cognizant of the upcoming employer mandate and the effect it could have on her business in 2016.

Krug said her salons now employ about 48 employees and although many of them are not full time, she plans to add seven more stylists later this year when her Cypress location expands. Krug said she is concerned about having to police her employees' hours and how the mandate could affect the growth of her salons.

She said it could cost more than $200,000 annually to provide the minimum requirements of health insurance for her full-time employees.

"[Small businesses], they don't make enough, and they can't afford it," Krug said. "Ultimately the employees or the customers are going to pay for that, and when neither one has the money to do that, you just can't do it."

Health care providers

After one year under the new rules of the ACA, health care providers in the Greater Houston area are seeing change in the health care industry.

"With the Affordable Care Act, it really was that three-pronged approach to cover the uninsured, bend the cost curve and redesign the way we deliver care," said Rosie McStay, director of government relations and community benefits for Texas Children's Hospital, which has a hospital in Katy and one planned for The Woodlands.

McStay said the legislation's removal of lifetime caps for insurance coverage helps families that may need to pay for extended periods of critical care. She said the removal of pre-existing medical condition clauses has also improved health care coverage for Texas residents.

"[Previously] if a baby has surgery and a congenital heart defect is fixed, it would still be considered a pre-existing condition even in their teenage years and going into adulthood," McStay said. "Now, that is no longer the case. Now [patients] can get health coverage that they would not have been able to [get] because it was so cost prohibitive to do it in the past."

The Harris Health System, Harris County's hospital district, has seen few changes related to the ACA in the last year because the majority of the patients served are uninsured, said Mike Norby, Harris Health System chief financial officer. Although the number of patients the district serves increased to 320,000 this year, Norby said, the district has seen only a slight decrease in the percentage of uninsured patients.

"Last year, it was about 64.3 percent," he said. "This year, I think we've dropped to a little bit under 64 percent, but as we drill in and look at our payer mix, very little of that change has occurred as a result of the Health Insurance Marketplace."

Norby said HHS will feel the effects of the legislation in the foreseeable future because of the state's decision to not expand Medicaid coverage. In the next six years, he said the federal government will reduce about one-third of the costs from the Medicaid Disproportionate Share Hospital program.

"We happen to be in the state of Texas where we don't believe in providing insurance for low-income people," Norby said. "As a result, we're going to take a hit as disproportionate share funding shrinks even though our level of uncompensated care is going to continue to go up."

Had the state of Texas agreed to expand Medicaid, Norby said the hospital district would have received about $75 million–$80 million annually in federal funding through the ACA.

Steve Sanders, former CEO of Memorial Hermann The Woodlands Hospital, said the biggest challenge to health care following the implementation of the ACA is how many consumers actually buy health insurance as the cost of copayments and deductibles rise.

"Just because [consumers] may get an insurance policy that has a $150 a month premium, as an example, they may be able to afford that, but if they have to go to the hospital and be admitted and have surgery and they [have] a $5,000 deductible, how are they going to pay for that?" Sanders said. "That is usually what people don't think about. And that is what is really shocking people is that the copays and deductibles in a lot of these policies are extremely high, and it is still a big financial burden on the people who really can't afford insurance in the first place."

As consumers struggle to pay for rising health care costs, Sanders said it places a strain on health care providers who are trying to collect that money.

Serving Houston-area residents

The number of uninsured residents in Harris County tops 1.1 million people, said Porfirio Villarreal, public information officer for the Houston Department of Health and Human Services. However, Villarreal said the number should continue to fall as people become more accustomed to the process of enrolling in health insurance every year.

"Most people will qualify for some subsidies to help them enroll," he said. "Because they are low-income, they will get assistance in paying for those premiums."

The ACA could be beneficial to low-income residents in Harris County, Norby said. However, HHS patients have no incentive to apply for coverage through the Health Insurance Marketplace since individuals making less than 200 percent of the federal poverty level receive free services through the hospital district with an optional copayment, he said.

"If I'm an individual that can pay $20, $30 or $50 a month for insurance coverage, or I can get it free with a $10 copay anytime I need service, what [am I] going to choose?" Norby said.

Norby said an increase in the individual mandate fine—which is set to more than triple in 2015—could encourage more of HHS' patients to seek coverage through the marketplace.

The district also plans to implement a pilot program this year to seek out local subsidies for uninsured residents to get coverage through the Health Insurance Marketplace.

"We're also looking at foundation assistance to try and see if we can work with patients and local foundations to provide additional local subsidies in addition to the federal credit to help individuals sign up for coverage with less premium cost [and] less cost out of their pocket," Norby said. "We'll be testing that out this enrollment period just to see what the reaction is."