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July 25, 2013

Otsego tallies costs of new health law

By Joe Mahoney The Daily Star
Cooperstown Crier

---- — The decision by President Barack Obama to delay implementing part of the Affordable Health Care Act will spare Otsego County government from having to spend an additional “several hundred thousand dollars” for the employees who currently don’t have health care coverage, officials said last week.

That’s the good news, in the view of Russ Bachman, the county’s acting treasurer.

The bad news, he added, is that the county will have to come up with an estimated $96,831 in 2014 to pay for one part of the program that is not being delayed, a so-called reinsurance fee for each individual covered by county medical benefits.

That sum is based on the fact that the fee amounts to $63 for each of the 1,537 people currently covered by the Otsego County medical benefits plan.

Out of the current county workforce of 780 employees, 546 workers are enrolled in the county health care plan. Given that many workers choose to cover their spouse and children, those 546 policies cover those 1,537 people, according to Bachman and Rose Laraby, a Treasurer’s Office staffer.

The reinsurance fee was designed to help stabilize premiums in the individual health insurance market for those with pre-existing conditions It will be effective from 2014 through 2016 although Bachman envisions it could stick around longer than that. He noted the government often finds ways to keep funding streams alive even after they were intended to sunset out of existence.

Precisely how the county will come up with the nearly $100,000 that will be needed to cover the reinsurance fee is a question that the county Board of Representatives, along with the Treasurer’s office, will have to tackle when budget planning begins in earnest later this year.

Bachman is filling in now for County Treasurer Dan Crowell, who is expected to assist the representatives in putting the finishing touches on the spending blueprint when he returns from his military deployment this fall.

The county workforce is expected to shrink considerably if a local development corporation set up by the representatives this year is successful in finding a buyer for the Otsego Manor nursing home and closing on the real estate transaction. The Manor now has 269 workers, more than a third of the total county workforce. County officials have said they hope the Manor can be privatized some time in 2014.

Because of the mandates of the Affordable Health Care Act, Bachman said, the county was preparing to offer health care insurance to the approximately 50 Manor workers who currently work part-time for an average of 30 hours a week but do not qualify for coverage under existing rules. It’s that part of the program that’s being delayed until January 2015.

“The delay is definitely a positive thing for the county, because our health care costs would have been much higher” if the program kicked in in January, Bachman said.

The key part of the law that Obama has delayed would have had a much costlier impact on the county’s purse strings: the requirement that larger employers provide health care for workers or pay a fine. Most of the county workers who work part-time are on the Manor’s payroll, and by the time that section of the law becomes effective, they will no longer be county employees if the sale of the 174-bed nursing home is completed next year.

On Thursday, Obama, in remarks at the White House, said health care costs have “slowed drastically in a lot of areas since we passed the Affordable Care Act.” He added that “health care inflation isn’t sky-rocketing the way it was.”

He also contended that health care consumers are benefiting from the controversial law, which, according to a recent NBC/Wall Street Journal poll, is viewed by 49 percent of Americans as a bad idea while only 37 percent say it’s a good idea.

Obama’s promotion of the legislation, which he shepherded and now has delayed for larger employers, came after House Republicans argued it was unfair to postpone the requirements for businesses but not for the individual health care buyers and maneuvered to push back the mandates for both individuals and employers. The White House has vowed to veto any such measure, although the proposal to delay the requirements across the board is expected to be bottled up in the Senate.

Obama argued opponents of the law have sought to politicize the issue while ignoring its benefits.

Earlier this week, Gov. Andrew Cuomo, declared that persons who purchase health insurance plans on their own are expected to end up with reduced premiums in 2014 as a result of the new federal mandates.

State officials project that only about 17,000 individuals currently buy health insurance on their own. Approximately 2.6 million New Yorkers lack health insurance.

Bachman said a survey of Otsego County workers is showing that those employees who have no coverage tend to be younger persons who want to increase the size of their paycheck by avoiding the cost of participating in the plan.

Each worker with an individual plan contributes $133.67 per month. The yearly per-employee cost to the county for contributing to the individual plan is $6,416 - or just under $100,000 for every 15 workers.

Bachman said the federal law requires employers to offer insurance at a cost that cannot exceed more than 9.5 percent of the worker’s monthly gross salary.

The new law also created the Patient-Centered Outcome Research Institute that is charged with providing research into the effectiveness, risks and benefits of various medical treatments. That program, in the first year, is to be funded by a $1 fee on each person covered by an employer’s plan. The rate will increase to $2 per year in the second year.

For Otsego County, that means the county treasury will have to kick in an additional $1,537 to cover the 1,537 persons now covered by county medical insurance, Bachman said.