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Business North - The Daily Briefing - Business Newspaper Online
Region to lose inexpensive, no-frills health coverage
Small regional employers learned Wednesday their workers will lose affordable healthcare coverage provided by a plan that specifically targeted lower-budget firms.
HealthShare, created in 2008, told member companies their coverage will cease on Dec. 31. An internal analysis determined participants will be able to find affordable options through MNsure, Minnesota’s health insurance exchange, HealthShare Director Jenny Peterson wrote in a Sept. 3 letter. A significant outflow of customers to MNsure would “negatively impact HealthShare’s financial viability,” she said.
Peterson also noted that HealthShare doesn’t meet criteria required by the Affordable Care Act (ACA), which often is called “Obamacare.” Provisions of the ACA will force anyone not enrolled in a qualified healthcare plan to pay a penalty in coming years.
“So even if a person had HealthShare coverage, he or she would still have to pay the penalty next year,” Peterson wrote.
Although Peterson could not immediately be reached for comment, it appears the decision was made in recent weeks. In August, members of the plan were mailed re-enrollment packets that didn’t mention the program might close.
Approximately 240 companies participate in the HealthShare program, according to the provider’s web page. Most are relatively small, including such businesses as daycare providers, autobody shops, family construction firms, property managers, community publications and nonprofits. (Full disclosure: BusinessNorth is a HealthShare customer.)
The decision to cease operations represents a change in philosophy for Peterson. In a September 2011 interview with BusinessNorth, she said, “The jury’s still out on whether exchanges will lower costs. We still think there will be a place for HealthShare.” Numerous provisions of the Act, however, have been developed by the U.S. Department of Health and Human Services in the two years since her original prediction, and some are still evolving.
HealthShare was created by Generations Health Care Initiative, which was funded by a $12.8 million trust fund created when the St. Mary’s/Duluth Clinic (SMDC) Health System acquired Miller-Dwan Medical Center. The goal for Generations was to continue the hospital’s mission of indigent care that began in 1917.
Coverage through HealthShare has been available to companies in St. Louis, Carlton, Lake and Cook counties that employed from 1-50 persons. The median wage of employees at the time of enrollment could not exceed a median of $19.33 per hour.
The program’s coverage differed somewhat from traditional insurance. It was billed as having limited frills, and medical care was only provided within HealthShare’s geographical coverage area.
According to the Affordable Care Act, companies employing fewer than 50 persons aren’t required to offer healthcare coverage. Peterson, however, said small firms may qualify for tax credits if they provide alternative healthcare coverage to their employees.
But tax credits are of limited value to micro-size companies, said Bob Boone, owner of the Duluth-based Reader, a weekly regional publication.
“HealthShare was created for a very valid purpose and so far it has worked remarkably well,” said Boone, a HealthShare customer who fears similar coverage won’t be available once the ACA fully takes effect.
Companies enrolled in HealthShare pay a minimum of $68 per worker. The employee portion of the premium is no more than $99 per month. Boone anticipates policies offered through MNsure will cost many multiples of that rate and, unlike HealthShare, will require high deductibles. That could prompt some small companies to stop offering coverage or force them to provide much more expensive plans. Either alternative would make it much more difficult for small firms to attract good employees, he said.
Several executives at regional hospitals agree with Boone's assessment. In recent interviews, they also have told BusinessNorth that both premiums and deductibles are likely to climb, leaving many people with insurance that only covers catastrophic health problems. An Associated Press analysis released Wednesday evening said rates will range from $270 to $615 per month, depending upon age, for a mid-range policy.
Employers were to first to learn HealthShare will be discontinued. Employees are to receive a letter “within a few days,” Peterson wrote.
“We trust that this notification will provide you and your employees adequate time to explore options for health coverage,” the letter said.
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