Thomas Augostini, an employee benefits specialist, uses the carrot-and-stick analogy to describe the federal Affordable Care Act – also known as Obamacare.
The carrots are the good things that consumers will get, such as care for dependents up to age 26 and coverage for pre-existing conditions.
The sticks are the penalties that come with failure to comply with the new law.
In 2014, local governments and their employees are going to start feeling those sticks.
“There is a lot of uncertainty about what the impact is going to be,” said Augostini, of insurer Haylor, Freyer & Coon, in Johnson City. “I can, at least, tell you the budgets aren’t going to go down because of it. So, now, it’s about how do we budget for the impact?”
Some issues facing municipalities are:
• Managing personnel staffing levels and classifications that could trigger additional costs.
• Penalties for employees who opt for a health care exchange instead of the municipality-offered program.
• A 40 percent excise “Cadillac tax” in 2018 that forces employers – including municipalities – to get control of health care costs.
Managing the demands of Obamacare will require preparation and skill, experts say.
Leaders of villages, cities, towns and school districts with the equivalent of 50 or more full-time employees “should be learning as much as they can,” said Augostini, who held a seminar on the issue last week during the statewide meeting of the Association of Towns in New York City. And budgeting in advance for the health care law isn’t going to be easy, municipal officials are finding.
“This area is still very gray for us and for a lot of the other municipalities in Western New York,” said David C. Hartzell Jr., Clarence supervisor. “It will cost us more than what is estimated. Programs coming to municipalities from the federal government rarely come in on time and under budget.”
“We’re all going to be faced with it,” said Sheila M. Meegan, West Seneca supervisor. “We’re just learning as much as we can.”
Meegan said West Seneca joined a consortium, including Erie County Water Authority, Niagara Frontier Transportation Authority and Off Track Betting. Its members recently collected information on Obamacare during a six-hour workshop offered through a labor management group.
Topping West Seneca’s concerns, she said, is if the town will be required to foot the bill for health insurance for part-time employees come 2014. “My concern is, we are very heavy in part-timers,” Meegan said. “Do we pay the penalty and not provide it at all? Or, what if we find out in the end that it’s cheaper to hire people full time instead of part time?”
Town of Tonawanda Supervisor Anthony F. Caruana said town officials have been huddling with consultants from Lawley Insurance and labor management HealthCare Fund to get ready.
“So many provisions will take effect in 2014 and our Human Resources Department is working to make sure that we are ready,” said Caruana.
Caruana noted the town is concerned about the potential for a premium hike by the plan’s reduction, or elimination, of a subsidy made to insurance companies that provide coverage for Medicare-eligible retirees.
“The current subsidy allows BlueCross BlueShield to discount the premiums on their Over 65 plans, which leads to significant savings to the town,” Caruana said. “We are watching this situation closely.”
Orchard Park Supervisor Janis Colarusso said a consultant told officials the town can expect a 4 to 5 percent increase in health care reform taxes and fees” under Obamacare.
“We hope that upcoming negotiations with our unions will help contain the overall cost of our medical plans,” she added.
Cheektowaga Supervisor Mary F. Holtz anticipates “little impact” in 2014, noting new employees are now required to contribute to their health insurance. She also said the town’s contribution is high enough to meet the law’s mandates. Holtz, like other town officials, points to the post-2014 challenges of the law and how it applies to contract negotiations.
“The 2018 excise tax on high-cost plans,” she pointed out, “must be taken into consideration in future negotiations.”