LATHRUP VILLAGE, Mich.-It may be too soon to tell whether landmark reform will improve the healthcare system, but many in the CU community are expressing concern over the new law's ability to lower costs.
"I don't see anything in the bill that's any advantage to our employees, members, or organization," Michigan First CEO Michael Poulos told Credit Union Journal. "We are looking to reduce our premium costs, and what was just passed will not do that."
Poulos is concerned over the bill's efforts to cover the uninsured and those with pre-existing conditions. "Ultimately those costs get pushed down to us," he said.
What will also eventually drive up MFCU healthcare premiums, Poulos suggested, is the government mandating what must go into healthcare plans. Currently, MFCU shops insurance carriers to build plans that match its needs, which helps keep costs in line. "We won't be able to do much of that if (direction on how plans are constructed) comes from Washington."
The $530-million MFCU has 220 employees, but smaller credit unions need the greatest relief from rising healthcare costs. Michael Pastirik, CEO of the $37-million United Community FCU in West Mifflin, Penn., told Credit Union Journal late in 2009 (CU Journal, Nov. 16) that small credit unions may not be able to survive ongoing increases in healthcare costs. Pastirik has since moved his CU to a healthcare plan that has a deductible and a maximum benefit. "The new legislation now removes that maximum benefit ceiling, which helps us," said Pastirik. "But how will the health insurance companies make up for that?"
The big question seems to be how well the new legislation provides safeguards against insurance carriers passing on additional costs, including those from the Cadillac plan tax, stressed Molly Brogan, VP public affairs for the National Small Business Association in Washington. "While I credit the government for dealing with the access side of the healthcare equation, not much attention was paid to the cost side. For example, the Cadillac tax, there is no provision anywhere that says insurance companies can't pass down this expense in higher premiums. I don't think the legislation will reduce costs enough."
If costs do come down for small employers-those below 50 employees-Brogan estimated the savings would be minimal over the next five years. Brogan said that only 39% of small businesses can afford to provide their employees with health coverage, and reminded that the reform bill now requires those with 50 or more employees to offer health insurance or face stiff fines. "That that may limit growth," said Brogan. "If you have a company with 48 employees that is not providing healthcare, this new rule could be a major hurdle to growth."
Poulos noted that it might also lead some small CUs to consolidate. "Maybe they stop growing or just give up the ship and merge."
Michael Brillati, CEO of the Salus Group, a Sterling Heights, Mich.-based CUSO owned by five Michigan credit unions that provides employee benefit programs, is another who wonders where the money is going to come from to pay for the uninsured. "I am skeptical, and the general public did not want this bill."
Neither did Mary Ott Wood, CEO of the $72-million Florida West Coast Credit Union in Brandon, Fla. "I believe in healthcare reform. But I think more time should have been spent on constituent comments or more committee time in Washington. There was just not enough time put into this bill. People say years have been invested, but I don't believe that. I wanted reform, just not the whole package given to us at one time."
But in Orlando, Fla., the $1.2-billion CFE FCU expects CUs may get a boost is health savings account business from the reform package. CEO Joe Melbourne thinks the law will drive higher deductible plans, which means a greater need for HSAs. "I think we could see activity similar to what occurred when IRA accounts were first available."
CEO Hank Hubbard is taking an optimistic view, as well, hoping that reform will lower premiums at the $29-million Communicating Arts CU, which he runs in downtown Detroit. "More importantly, I hope it means our members have better access to healthcare. We see health-related collection items on nearly every credit report. That effects the cost and availability of credit for years."
