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PPACA Ruling May Have Limited Effect on Employers’ Plans

The Supreme Court finished hearing oral arguments on the health care reform law in March. Now, employers — along with patients and political pundits — can do little except wait.

Several judges, including Justice Anthony Kennedy — perceived as a “swing vote” in tight cases — severely questioned the government over three days on the individual mandate that requires all Americans to have health insurance and whether other provisions of the law could stand without it.

The justices likely have already cast their initial votes on the case, but a formal decision on the Patient Protection and Affordable Care Act (PPACA) is not expected until June.

No matter how the Court rules, employers will face some tough benefit choices, according to a report in Business Insurance magazine.

If the court strikes down the law, employers would regain some lost plan flexibility, Steve Wojcik of the National Business Group on Health told BI. Employers again could design benefits “without worrying about compliance with the letter of the [health care reform] law as opposed to what makes sense for their employees,” Wojcik said.

But because many provisions — including the extension of benefits to workers’ children through age 26 — are already in place, parts of PPACA may prove more difficult to unwind, Chantel Sheaks of Buck Consultants told BI.

“Once you provide a benefit, even if legally you can take it away, as a sense of company morale, it is [very] difficult to take it away,” Sheaks said.

Employers may encounter financial challenges if the Court strikes down the individual mandate but leaves other costly provisions intact.  A law that requires insurers to grant coverage to patients with pre-existing conditions without a mandate could further drive up health care costs by prompting the carriers to raise premiums to guard against the increased level of risk, theBI report noted.

Yet in the long run, the fate of mandate may become moot, according to a report in Bloomberg Businessweek. From the start, the individual mandate’s bite was relatively weak (a $695 annual charge or 2.5 percent of household income for not complying), and the government likely could come up with alternatives — such as tax credits or enrollment deadlines — that would be just as effective without the constitutional hurdles, according to Paul Ginsburg, president of the Center For Studying Health System Change.

In the meantime, many experts suggest that employers make no sudden moves.

“I’ve been advising clients since the beginning that the prudent course is to assume that an act of Congress will be upheld,” Tom Christina, an attorney with Ogletree Deakins, told Workforce magazine. “Pundits are saying that it looks like the individual mandate is dead but I would think that imprudent.”