CHICKASHA — At 92 employees, Cimarron Trailers falls among the ranks of U.S. employers — those with 50 or more full time equivalent workers who, starting Jan. 1, must provide health insurance to its employees or face steep annual penalties under health care reform.
Cimarron, which makes custom aluminum stock trailers in Chickasha that are sold nationwide, has offered group health insurance since it opened February 2004. The problem: since 2009, some 42 percent of its eligible workers take advantage of slashed monthly insurance payments under Insure Oklahoma — a 7-year-old, state-run income- and family size-based premium assistance program for qualifying individuals and employees of businesses with 99 or fewer workers.
Insure Oklahoma may die in December, paradoxically, because of health reform.
“I fear for our employees, and how it will affect them, if they lose the Insure Oklahoma subsidies,” said Lynn Terry, who co-owns Cimarron with her husband, Michael.
“Even if they can get what they need from the exchanges (online marketplaces coming next year), I worry if it will be a price they can afford,” Terry said.
Insure Oklahoma cuts costs
Depending on whether workers opt for individual, spousal or full family coverage, Cimarron pays 65 percent to 78 percent of their monthly health insurance premiums, or $325 to $1,100, Terry said. For its workers in Insure Oklahoma, the state pays 60 percent; Cimarron, pays 25 percent; and participants pay no more than 15 percent, she said.
A Cimarron employee in Insure Oklahoma, for example, may pay $7 weekly to cover himself and his spouse, as opposed to $46 without assistance, she said.
If their subsidy goes away, many Cimarron workers, especially single young men, will drop coverage, Cimarron human resources director Clif Cypert suspects.
Nico Gomez, chief executive of the Oklahoma Health Care Authority (OHCA), confirmed with The Oklahoman this week that his agency has been informed by officials at the Center for Medicare & Medicaid Services that the waiver under which Insure Oklahoma was established will expire Dec. 31. That means some $79 million in annual matching federal dollars will go away for the program, which the state funds through $50.4 million in yearly state tobacco tax revenues.
But an optimistic Gomez said he continues to negotiate with federal officials about retaining federal funds to keep the program — or at least a version of it. “We've worked too hard for this program that it's not going to go away without a fight,” he said.
Program covers thousands
Current Insure Oklahoma participants include 4,789 businesses, representing 16,705 participants, Oklahoma Health Care Authority spokeswoman Jo Kilgore said.
As program administrators lobby for Insure Oklahoma's continuance, other industry observers continue to press for state expansion of Medicaid called for under health care reform, while many state businesses brace themselves for the largely unknown.
The federal government wants to end Insure Oklahoma and premium assistance programs in some 18 other states because, philosophically, there's no need for them under health reform, said Cori Loomis, a health care attorney with Crowe & Dunlevy in Oklahoma City. The federal legislation calls for expanding Medicaid, which has traditionally been offered to only women and children, and offering tax breaks to, basically, the working poor, or those Insure Oklahoma and the other assistance programs intrinsically serve, she said.
The rub is that Gov. Mary Fallin has opted not to expand Medicaid, Loomis said, though come January, federal subsidies still will be paid by the federal government to qualified low-income residents who buy insurance on a federally-operated exchange in Oklahoma.
Yet, she said, analysts agree it's only at or below an annual income of $58,875, or $94,200 for a family of four, that the Affordable Care Act's subsidies make exchange coverage, on average, as good as or better than employer-sponsored health plans.
Medicaid expansion supporters
Meanwhile, David Blatt, director of the Tulsa-based Oklahoma Policy Institute, and State Rep. Doug Cox, R-Grove and an emergency room physician, continue to lobby for the expansion of Medicaid in the state.
“We don't know for certain what the federal government will decide (regarding Insure Oklahoma),” Blatt said. “There may be some flexibility with buy-in to the employer plans, though it's hard to see the individual plans continuing.”
“Still, I think we can use the Insure Oklahoma budget to cover far more than the allowed 35,000 participants,” Blatt said. “Why would we turn down 90 percent to 100 percent funding from the federal government to expand our Medicaid program versus pay fully one-third of the funding for Insure Oklahoma?” he said. “That doesn't make sense.”
“We need to allow additional Oklahomans into Medicaid. It's not about entitlement, but hardworking people who can't afford insurance,” Cox said. “They're doing low-wage jobs for small companies.”
Small employers can benefit
In Oklahoma City, Shield Manufacturing, which sells plastic film for meat products, and Gold Star Graphics screen printing and embroidering firm are among those small companies.
Because of premium reimbursements under Insure Oklahoma, Shield Manufacturing was able to reset its deductible in 2010 and 2011 from $500 to $1,000 said Kathleen Oliver, who employs fewer than 10 workers.
Today, Oliver, who has no current Insure Oklahoma participants, is considering raising the deductible again to offset rising insurance costs.
Meanwhile, Insure Oklahoma saves Gold Star some $500 a month, owner Pam Guffey said. Of her 16 employees, two qualify for premium assistance, she said.
Premiums this year were scheduled to go up 14 percent, but Guffey reduced the increase to 7 percent by moving from a 80/20 co-pay to a 50/50 co-pay, she said.
Though Guffey the past two years has taken advantage of new tax credits for small employers who offer health insurance under health care reform, she said she remains “very skeptical” about health care reform and the key mandates coming in January. “I just don't understand what will happen,” Guffey said.
At a glance
What is Insure Oklahoma?
Established in 2005, Insure Oklahoma provides premium health insurance assistance to businesses with 99 or fewer employees and self-employed people by using state tobacco tax revenues matched with federal funds. Employees must meet age and income requirements, be Oklahoma residents, meet citizenship guidelines and pay part of the premium payments. Workers pay about 15 percent of the premium, while the employers pay 25 percent and Insure Oklahoma pays 60 percent. Spouses also may qualify through the program. About 30,300 Oklahomans are enrolled, and 4,789 small businesses are participating, representing all 77 counties in Oklahoma. For more information, go to www.insureoklahoma.org or call (888) 365-3742.
New mandates are coming
• Beginning Jan. 1, 2015, individuals must have health insurance or pay an annual penalty of $95 or 1 percent of income; $695 or 2.5 percent of income by 2016.
• Businesses of 50 or more full-time equivalent employees must offer health insurance or pay annual penalties of $2,000 per full-time employee, excluding their first 30.
• Fines can be $3,000 per employee if a company's insurance is deemed inadequate (covers less than 60 percent of essential benefits) or unaffordable (costs more than 9.5 percent of a worker's salary, or $117.67 monthly for a minimum-wage worker).
• Legal residents between 100 percent of federal poverty level ($11,170, or $19,090 for a family of three) and 400 percent can buy health insurance through state- or federally-operated exchanges and be eligible for variable tax credits based on annual income and family size.
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