Reform's reduced effect on Medicaid could impact employers

Employers could be liable for stiff financial penalties as a result of a portion of the U.S. Supreme Court's health care reform law ruling that invalidated massive federal sanctions against states that fail to expand eligibility for their Medicaid programs.

In addition, the Medicaid part of the ruling could result in a much smaller reduction in the number of uninsured U.S. residents compared with earlier projections, according to estimates by the Congressional Budget Office.

If those projections hold true, the effect of one of the big positives of the Patient Protection and Affordable Care Act for employers—a reduction of uncompensated care costs, which providers now shift to employer health plans—could be much smaller than employers had hoped.

“Hospitals could have more uncompensated care than anticipated, and there will be cost-shifting to those who have coverage,” said Barbara Gniewek, a principal with Pricewaterhouse-Coopers L.L.P. in New York.

Until recently, there has been little direct employer focus on the Medicaid part of the health care reform law ruling.

“It has been a sleeper issue,” said J.D. Piro, a senior vp with Aon Hewitt in Norwalk, Conn.

But that has begun to change.

“People are now talking about it, and we have been doing a lot of modeling for affected employers,” said Tami Simon, managing director-knowledge resources with Buck Consultants L.L.C. in Washington.