CieloStar Comments on Employer Mandate Postponement
The US Treasury Department announced last week that the Obama administration had decided to postpone the Affordable Care Act mandate requiring employers with more than 50 full time employees to provide affordable and compliant health care coverage (or face a penalty) to their employees by 12 months. The mandate will now be effective on January 1, 2015. No other element of the Affordable Care Act was modified by the decision so individuals (with certain exceptions) must still have healthcare insurance or face a penalty of $95 in 2014. This decision is meant to allow government agencies to clarify various aspects of the law and to allow companies more time for input into that process as well as preparation for implementation. Some of our clients and friends have asked us what impact we think this decision will have on the advisability of establishing private exchanges this year for operation during open enrollment and 2014.
We think this decision gives impetus to the establishment of private healthcare and benefit exchanges now for the following reasons:
- Establish market presence with powerful branding behind it before the mandate kicks in;
- Build an initial customer base while refining operations, processes and the economic model;
- Benefit from the experience of operating the exchange to more closely align product offerings with customer demand as time goes on;
- Get ahead of others and establish a position of leadership and creativity to help spur membership;
- Leverage the members’ experience with the exchange to become an even more valued partner.
We have long maintained that 2013 would be the year of healthcare confusion, akin to throwing a deck of cards up in the air and not knowing how they will fall. Confusion can breed paralysis or it can spell opportunity. The sooner creative solutions are offered into this space, the larger the eventual market share, the larger share of the cards coming back to earth ending up in the hands of the bold. There will be fog over this particular battlefield for a long time; coming to the fore now with solutions that help simplify, create efficiencies and hold down costs are ideas whose time has come. And none of the resulting benefits will come to those who wait because the demand is so great. If you are waiting to set up an exchange in hopes that clarity will emerge from the passage of time, it’s likely to be a very long siege.