By Thomas J. McKillen
Managing Editor

Understanding health care reform will be another challenge for business owners to deal with in the coming years.
“It is something a lot of business are concerned about,” said Lynn Grgich, director of the Germantown Area Chamber of Commerce.
The legislation overhauling the nation’s health care system was signed into law by President Barack Obama in March. While the whole program of national health coverage for everyone won’t take effect until 2014, certain provisions are planned to take effect this fall.
Grgich said the message she has received from those knowledgeable about health care reform is that there are many changes possible before any portions of the legislation are implemented this fall.
“Which I’m sure adds to the anxiety,” she added.
To help Germantown Chamber members get a grasp on the issue, Grgich said the Germantown Chamber is working with the West Bend and Hartford chambers to have an “after hours” event in October which will feature a panel discussion on health care with experts in health care, insurance and law.
In the meantime, the issue is a hot topic of discussion among businesses, according to Menomonee Falls Community Chamber Executive Director Sue Jeskewitz. She said the issue has come up during discussion at chamber events.
“Everyone is talking about how it will affect us,” Jeskewitz said.
The Menomonee Falls and Sussex chambers joined several other dozen chambers in organizing a June 22 presentation about health care by Daniel Schwartzer, a representative from the Wisconsin Association of Health Underwriters (WAHU). In information presented at the meeting, Schwartzer said WAHU and the National Association of Health Underwriters supported reform “but opposed the Senate bill — we believe it to be misguided.”
“It does not address the cost of providing medical care, the true driver of private health insurance premiums,” a Powerpoint presentation shown at the meeting stated.
Schwartzer explained that the Health Insurance Reform Implementation Fund will be created within the Department of Health and Human Services to administer the fund. Among immediate changes will be a 10 percent tax on indoor tanning services that takes effect July 1. Also, employers who offer a Medicare Part D subsidy to retirees will have to account for the future loss of the deductibility of the subsidy on liability and income statements.
The law creates a “high risk pool” nationally, but Wisconsin already has a high risk pool to serve as a safety net for people who can’t find coverage because of health conditions.  Schwartzer said federal funds cannot be added to the current Wisconsin high risk pool because it is considered “credible coverage.” He said the state will be setting up a second high risk pool in an attempt to secure federal funds.
In 2010, lifetime limits on the dollar value of benefits for any participant or beneficiary will be barred, though annual limits are allowed on plans that are grandfathered until they expire. Health coverage rescissions for individual plans will be barred, except for cases of fraud or intentional misrepresentation. In addition, all group and individual plans will have cover pre-existing conditions for children ages 19 and younger, a provision which will take effect right away.
The legislation will also require preventive services to be covered. Schwartzer indicated that “the big key will be in the adolescent coverage” because current plans are not at the level of what’s specified.
“If there’s going to be any premium increase, it’s going to be on that,” Schwartzer said.
Also, all group and individual plans will have to cover dependents up to age 26.  Schwartzer said that provision will take effect with the start of the plan year, which begins in September 2010.
Schwartzer said the state passed a law  requiring plans to cover dependents up to age 27, a provision which has been dubbed by people in the industry as “the slacker mandate.”
Schwartzer said there will be tax issue because of the difference between the state and federal law.
“We lobbied very heavily to have the current legislature and current administration change the law to confirm with the federal law or confirm with the definition of dependent according to the IRS, and they rejected our bill,” Schwartzer said.
He added that WAHU will lobby the legislature again when it begins its next session in January.
While the federal legislation requires coverage of emergency services at the “in-network level” for out of network providers, Schwartzer said state law already requires that.
A provision which is bound to have a major impact is the minimum loss ratio requirements, which will bar insurers from having administrative costs of 15 percent or more for large group plans and 20 percent for small group plans. Insurers will be penalized over those amounts by having to provide rebates to clients. Schwartzer said the average administrative costs overall will be less than 15 percent. However, administrative costs in the individual market is “far, far higher.”
“There will many insurers that will not be able to meet that minimum loss ratio requirement,” Schwartzer said.
In addition, Schwartzer said there will be “disincentives” for consumer-driven plans due to the administration costs.
By 2011, over-the-counter drugs are no longer reimbursable under health savings accounts, the deduction for Medicare Part D will be eliminated and there will be a $4.8 billion tax on prescription drug manufacturers.
“That will be a direct pass through. We fully expect you will see increases in your drug card plan or if you’re a funded employer you’re going to see increases in prescription drug costs,” Schwartzer said.
By 2012 there will be “massive cuts” to the Medicare Advantage Plans and health insurance company employees may not be paid more than $500,000 annually. By 2013, there will be a .9 percent Medicare Hospital tax on self-employed individuals  and employees with wages above $200,000 and $250,000 for those filing joint returns. A 2.3 percent excise tax will be charged on excise fees.
“We do see significant premium increases in 2013 when that tax goes into effect because medical devices affect everything. The cost of MRIs are going to go up — pacemakers, things of that nature — there will be a 2.3 percent tax and that will be  a pass-through to consumers,” Schwartzer said.
By 2014, exclusions in health insurance based on pre-existing conditions will be barred and coverage must be offered in all markets. Also, each state will create an “exchange” to facilitate the sale of benefit plans to individuals. Employers will be required to provide health care coverage to their employees and will be fined if they don’t.
“Our concern is they created an incentive for employers to get out of the health benefits market and simply pay the penalty,” Schwartzer said.
In addition, there will be an $8 billion tax on insurers. Schwartzer noted that the total profit for all insurers in 2009 was $8 billion. Schwartzer cited data from the Congressional Budget Office estimated the provision “will increase premiums by at least 20 percent — we believe it will be much higher.”
Schwartzer added that if insurers are barred from passing that cost onto consumers, “you will see — we think — a mass exodus of insurers from the marketplace because they simply can’t afford to stay in business.”