As president and general counsel at the Employers Association of New Jersey, John Sarno worries a lot about health and wellness, both of which can make a significant difference to an employer’s bottom line.
Recently his non-profit has had two significant achievements in this area, driven by the Patient Protection and Affordable Care Act, the implementation of which will step up in January, 2014. First, with funding from the Robert Wood Johnson Foundation, EANJ has created a legal compliance website for employers who want to develop wellness programs in the workplace.
Following on that success, his association is doing a joint project with the Rutgers Agricultural Experiment Station called “The Workplace Wellness Campaign.” Funded by the Centers for Disease Control and Prevention, it is helping to develop pilot programs in every New Jersey county to promote wellness at particular worksites.
For this project, the Employers Association has done surveys for the pilot employers and provided information and advice through consulting as well as 20 free technical assistance webinars. This program will culminate with a meeting on Wednesday, May 15, at the Parsippany Hilton, “A Day Devoted to Workplace Wellness,” which will include a panel of participating employers and expert speakers.
Sarno will speak at the Council on State Public Affairs’ “New Jersey: State of Health 2013,” on Wednesday, May 8, from 8 to 11:30 a.m., at Robert Wood Johnson Hamilton Center for Health and Wellness, 3100 Quakerbridge Road, Hamilton. Other speakers include Raquel Mazon Jeffers, director of health integration at the Nicholson Foundation; Skip Cimino, president and chief executive officer at Robert Wood Johnson University Hospital Hamilton; John Jacobi, faculty director and professor of health law and policy at Seton Hall Law School; and Kenneth Sable, executive vice president and COO at Saint Peter’s Healthcare System. Cost: $95. To register, go to statepublicaffairs.org. For more information, contact Rebecca Perkins at 908-580-0946 or firstname.lastname@example.org.
The act has several implications for employers, hospitals, and healthcare providers:
More insured New Jerseyans. Although New Jersey will not have a state-facilitated healthcare exchange, uninsured New Jerseyans and some small businesses will be able to purchase health insurance on the federally facilitated exchange. Open enrollment starts October 1 for the plan year beginning January 1, 2014; and individuals will be able to choose one of four plans. It is projected that, based on income, 900,000 individuals will be eligible for a subsidy to help purchase insurance.
In New Jersey the subsidies are anticipated to be about $700 million, paid for by taxes on insurance plans, medical device manufacturers, and some employers who do not offer affordable healthcare, as well as through Medicare savings.
Plans not cheap. “The plans are going to have solid actuarial value,” says Sarno, “which means they will pay for between 60 and 90 percent of healthcare costs.” But the plans, which must cover people with pre-existing conditions without raising prices on them, will be sold by insurance companies that need to make a profit. Carriers are also going to be paying taxes to help pay for the subsidies. All of this will be pushed onto the cost of these plans for the consumer.
Employers likely to continue offering health insurance. The Employers Association is conducting meetings all over the state to find out what its members’ intentions are regarding health insurance. “The vast majority of employers will continue to offer health insurance,” Sarno says, adding that 75 percent of New Jerseyans get their healthcare through an employer-sponsored plan. The remainder are covered through Medicare, Medicaid, or a small percentage buy their own plans.
In total New Jersey has about 1.3 million uninsured, though exact numbers for undocumented workers are not available. “Most of these people are in a family where there is at least one full or part-time worker who holds a service or a labor job,” says Sarno.
“They make too much money for Medicaid and are not old enough for Medicare, and their employer does not offer insurance, even to fulltime workers.” Most of these, he adds, work for smaller employers.
Because most of these people are working, the exchange provides a tremendous benefit to small employers, says Sarno. “This was a totally overlooked aspect of the law,” he explains. “Now their employees will have healthcare and be healthier, and the employer is not paying for it, and the employer is not going to be penalized.”
Only employers with 50 or more employees, he adds, may be penalized under certain circumstances if they don’t provide affordable care that meets certain benefit standards.
Sarno expects some cost shifting but does not anticipate a lot of employers discontinuing coverage. “That was the fear — that employers would bail out and employers that continue to offer coverage would be left holding the bag: the less payers, the higher the price,” he says, noting that insurance is a pooled risk, and fewer employers would raise the price of premiums. But now that the regulations are in place, he says, this is no longer much of a concern.
“They may be tweaking their plans and there may be modest additional cost, but for most it will be status quo,” he says.
Medicaid expansion. Some 300,000 primarily working adults in the state whose incomes were too high for the existing Medicaid program will now be covered. The income threshold has been raised from 110 to 133 percent of the federal poverty level. The federal government will pay 100 percent of the coverage for the first five years, reduced to 90 percent thereafter. This expansion means that most poor and low-income families will have access to healthcare.
New approaches to chronic disease. Several accountable-care organizations are being formed in New Jersey. These are collaborations between physicians and hospitals to provide care in a patient-centered way so that doctors are rewarded for quality outcomes rather than being paid by number of procedures. “Insurance carriers will be underwriting the care with an insurance policy,” says Sarno. “It is an interesting model that may or may not have occurred without the Affordable Care Act but certainly is moving ahead now.”
Preventive care. Starting in 2014, there will be no deductibles or co-pays for preventive care. “As people begin to get preventive care rather than waiting until they get very sick to get emergency care, you can see how transformative this is going to be,” he says.
His organization is promoting workplace wellness, he says, noting that the Affordable Care Act gives employers tools to provide incentives to employees by adjusting premiums. “They can reduce a premium by 30 percent by having an employee involved in a structured wellness program,” he says, adding that smokers can be charged a surtax for smoking.
With regard to wellness, employers are doing interesting things, like smoking cessation programs, walking clubs, and healthy eating seminars. One of the pilot employers in the Employer Association’s project on wellness, Miele, is working with local farmers to make deliveries right to the workplace.
Assessing the Affordable Care Act’s implications for New Jersey, Sarno sees the increasing number of insured individuals as being great for the state. “The good news is that many more people in New Jersey — close to one million when you consider the healthcare exchange and Medicaid expansion — will have healthcare insurance; and that can only have an enormous positive impact on the economy,” he says.
This expansion of insured individuals is a direct investment in the human capital of the state, says Sarno, including higher productivity due to less sick time as well as less emergency care, which is the most expensive medical care available, and less drain on the emergency rooms. “The use of the emergency room as a primary care clinic, which is what most uninsured people do, is an enormous burden on the economy,” he says.
But the new law also offers challenges to the state. The biggest one will be how to supply healthcare to a million new customers. “We’re talking about increasing the number of doctors or at least healthcare professionals who can provide basic healthcare,” says Sarno. “There is room for innovation here — for community centers, pharmacies, and large grocery chains also to be places where people go to get their primary care.”
Sarno earned his bachelor’s degree from Ramapo College in 1977. After he got a master’s degree in counseling from Seton Hall University in 1980, Ramapo hired him as a counselor for people with disabilities. He ran the office of specialized services there for a decade, gaining in the process an extensive clinical background. The program received national recognition for its work with students with disabilities.
While working at Ramapo, Sarno earned his law degree from Seton Hall University. He believes law was a natural extension of the disabilities work he was doing. After law school, he clerked in federal court and practiced general litigation there from 1989 to 1995. “Now I am back working with employers, combining my two careers,” he says. He has been with EANJ for about 18 years.
The remaining question for employers regarding the Affordable Care Act is the market, suggests Sarno. “For an employer, it is all about whether the market can provide quality healthcare affordably. I think the law has done a tremendous job in getting people insured, but we don’t know whether it can be done affordably,” he concludes.