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 enrollment now open through Feb. 15, the ACA will continue to mold and reshape health care in the region in 2015.
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 ensuring 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 it 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."
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 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 from 64.3 percent a year ago to just under 64 percent this year.
Norby said Harris Health 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."
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?" he said.
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, patients of Harris Health 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 in 2015 could encourage more of Harris Health's patients to seek coverage through the marketplace.
Employer mandate effects: Katy ISD
Unlike many large businesses, Katy ISD will not have to make any drastic changes with its health care coverage when the Affordable Care Act employer shared responsibility mandate goes into effect next year, school officials said.
The school district has about 9,100 employees, and 8,927 are considered full time and eligible for Texas Retirement System of Texas benefits, meaning they are also eligible for KISD Health Care Plan benefits, district officials said.
As of mid-November, 5,701 employees were enrolled in the health plan, school officials said.
Officials said TRS eligibility is much more inclusive than the upcoming ACA employer mandate, therefore they do not predict much of an increase in health care coverage or cost to the district.
According to the TRS, an employee is eligible for benefits if they work for 10 regularly scheduled hours or more each week. TRS officials said they already have implemented the coverage provisions of the ACA, and most changes had no significant impact. The most significant provision was the expansion of preventive services at no cost to covered employees.
"Since our eligibility requirements are more flexible than those of the ACA, it is unlikely that there are additional eligible employees that are not already offered coverage," KISD officials said in a news release. "We are developing a method of capturing hours worked for all employees since that will be a reporting requirement of the ACA next year."
KISD pays $385 a month per employee for health care benefits. Any increase in the overall cost of health care if more employees enroll would come from the general fund, school officials said.
"Under the ACA, the district must pay certain fees and expenses which contribute to driving plan expenses upward, placing pricing pressure on both the district and employees," officials said. "Since 2010, the Katy ISD Health Care Plan has complied with providing benefits mandated by the ACA. Some of those mandates were costly. Any increase in district contribution has a direct impact on the general operating fund, which supports teacher salaries, campus resources and other related student needs."