The Wall Street Journal
By: Louise Radnofsky
August 1, 2012
Two major provisions of the health-overhaul law take effect Wednesday, testing employers' ability to adapt to changes the measure mandates.
The law requires employers to distribute millions of dollars in insurance-company refunds to workers whose plans spent a high percentage of their premium dollars on administrative expenses instead of medical care.
Employers also will have to begin including contraception and other women's services in workers' insurance plans without charging employees co-payments or other fees.
The Department of Health and Human Services said Tuesday that it estimated from Census data that 47 million women between the ages of 15 and 64 were enrolled in private health insurance plans that are subject to the new requirement to cover contraception and other health services. It isn't clear how many women will actually use those services.
The requirement to cover birth control includes the so-called morning-after pill and sterilization. Insurance plans also will have to cover several other services for women without charging copayments, such as breast-feeding support and supplies and screening for gestational diabetes, HIV and domestic violence.
Some Catholic business owners, dioceses and charities are fighting that requirement in courts on the grounds that it could force employers to violate their religious beliefs.
.Although the contraception requirement officially takes effect Wednesday, many employer health plans don't have to start complying until their new policy year begins, which is typically Jan. 1. Some religiously affiliated employers, such as universities and hospitals, don't have to comply for another year.
Health and Human Services Secretary Kathleen Sebelius said in a news conference Tuesday, "For too long insurance companies have stacked the deck against women, forcing us to pay more for coverage that didn't meet our needs."
Robert Zirkelbach, a spokesman for the trade group America's Health Insurance Plans, said most plans already cover preventive care, sometimes without co-payments, because it saves them money. The industry has spoken out against the requirement to cap spending on administrative costs and profit, saying that medical costs are the main reason for rising premiums.
Consumers may not see changes immediately. In some cases, employers are allowed to hold onto the premium rebates and use them to offset premiums for workers for next year, or apply the money to a company fund aimed at promoting wellness, rather than sending out individual refunds.
The federal government required insurers to send letters directly to workers enrolled in these plans, telling them that their plan is getting rebates. That could leave some workers disappointed if their employer decides to roll the premium rebates into future costs rather than directly cutting workers a check.
TrueBridge Resources, a staffing firm in Atlanta, is trying to track down 227 people, most of whom have finished their contracts and are no longer employed by the firm, to get them their share of a $27,000 rebate the company has received from insurer Humana. The staffingcompany has calculated each person's share of the rebates and the amounts range from $4 to $650, said Ellen Stortz, human-resources manager for TrueBridge Resources. Ms. Stortz said the amount was too large to justify keeping, and she said she planned to dig up email addresses for former workers to prevent them from getting left out of the refunds. "We don't want to encourage a bad relationship with them," she said.
Under the 2010 health overhaul, insurers must spend a given percentage of premium revenue on medical care instead of putting it toward profit or overhead expenses such as salaries. For small employer plans, the medical spending can't be less than 80%. For larger employer plans, the threshold is 85%. The rebates are expected to total about $1.1 billion for plans that operated in 2011.
Most of the rebates have gone directly to employers who offer group health plans for their workers, and usually pay some or all of their premiums. That means they also have had to figure out how much, if any, of the refund they should pass along to the employees.
Some Catholic employers are pushing to overturn the contraception requirement. They made a step forward last week when a federal judge in Colorado granted a temporary injunction from the requirement to a heating-and-cooling company. Another Catholic-owned company, Weingartz Supply Company, and Legatus, an organization of Catholic business leaders from roughly 2,100 companies, are seeking a similar injunction in Michigan.
Ms. Sebelius said in a statement after the Colorado decision that there were no plans to change the requirement.
"The administration is committed to ensuring women have access to the health care they need regardless of where they work," she said.