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Health Care Reform's Effect on Business

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In addition to asking candidates for our Top 100 Most Influential People in Accounting their opinions on IFRS and convergence, we asked:

"What effect will this year's health care reform legislation have on business and the U.S. economy?"

All the candidates' responses -- insightful, and often passionate -- are included below.

The immediate impact is already being felt. Uncertainty in terms of how reform will impact businesses has already resulted in delayed business decisions, including hiring for small businesses, which will also likely be a factor delaying recovery. Though there are many points of distinction with the federal legislation, Massachusetts' health care reform and its impact on business offers a view into the future, and possibly some lessons, for federal health care reform. Most notably, reform has had no positive impact on the high cost of health care delivery in the Commonwealth -- costs here have risen faster than the rest of the nation since 2006.

As a result, small businesses are dropping coverage, leaving more people to apply for the state's public health plan. The net result is that the cost of reform is exponentially higher than originally estimated and, as a result, is contributing significantly to the budget deficit in my state. To address this, the state continues to look at new sources of revenue -- primarily through increased taxation, which will further slow recovery.

-- Mark Albrecht, CEO, XCM Solutions

Employers: All employers will have to decide whether it is better to continue to provide health insurance for employees or to pay a fine and have employees purchase their own insurance through the new health insurance exchanges. Since the fines are relatively low, there may be more employers dropping health coverage for their employees than adding coverage, which is a bit counter to the intent of the health care reform law. There will be much analysis on this between now and 2014, when the individual coverage mandate takes effect.

Insurers: Insurers have a tremendous amount of work to do, since they have not traditionally sold policies to individuals and the health insurance exchanges are a new concept. They will also have to make a lot of changes to their administrative processes, pay additional taxes and respond to greater scrutiny over their operations.

Health care providers: The impacts to providers will vary, but as whole, are expected to be negative. Providers will be forced to show that they are delivering high-quality care or they will see their reimbursement cut.

State governments: Much of the burden for implementing the new law rests with the states. The states must set up health insurance exchanges, administer new programs, qualify more constituents for Medicaid and many other initiatives at a time when budgets are being cut and tax revenues are falling short. Hence, many states are challenging the constitutionality of the new law as it interferes with states' rights.

Taxpayers: The new health reform law does not have any proven and mandated approaches to controlling spiraling health care costs. Health care costs are expected to continue increasing and will be a growing strain on the American people and the businesses that operate here. Without controlling the growth in health care costs, it will be nearly impossible for the federal government to cut the deficit and reduce the national debt burden, so there remains a looming fiscal crisis that is not being addressed by the new health care reform legislation.

-- Charles Allen, CEO, Crowe Horwath LLP

In the short term, the reform will probably have little impact as many of the core provisions such as increased taxes on higher income taxpayers do not take effect until 2014.

-- Jordan Amin, Chair, National CPA Financial Literacy Commission, AICPA

I simply do not know, and I am not sure many people really know. I do believe it will lead to more consolidation in health care and will most likely have significant implications as to what segment of the economy bears more or less cost.

-- Rick Anderson, Chairman and CEO, Moss Adams

The Patient Protection Act and the House Reconciliation Act fundamentally alter the health care system for individuals and employers in the following ways:

-- The bills push the U.S. closer to universal coverage by requiring all individuals not covered by Medicaid or Medicare to obtain health care coverage or to pay penalties.

-- Employers electing not to offer qualifying coverage will be subject to penalties. Certain small businesses are exempt.

-- Although many of the provisions don't apply until 2014, certain small businesses will get credits in 2010 for buying insurance today.

-- To help individuals and small business pay for these new requirements, the bill offers tax credits to cover premiums. The costs of increased coverage will be paid for by a series of new taxes and fees on individuals and businesses.

-- Higher-income individuals will be subject to increased payroll taxes and new taxes on investment and passive income, including interest, dividends, capital gains and royalties. Generally, the new taxes apply to individuals with income of more than $250,000 annually.

-- Individuals with expensive health care plans -- or "Cadillac" plans -- will be required to pay a significant excise tax.

-- Additional changes to the current bills are likely to be passed in the coming months.

Although many parts of the legislation will not take effect for years, some companies have already anticipated the massive, immediate charges they will incur due to the increase in costs. In addition, there is speculation that business will stop providing health care for its employees, not only to relieve themselves of the added expenditures, but also because the government will provide it to their employees.

However, the final ramifications remain unknown, as policy changes are being considered before the full legislation goes into effect. Until then, companies and individuals alike continue to watch with bated breath.

-- C.E. Andrews, President, RSM McGladrey

While it is too early to really have a good idea on the impact of the health care reform legislation on businesses and the U.S. economy, there are some positive talking points about the legislation.

-- It would make insurance more affordable for small business and their employees.

-- There could be a tax credit for small businesses.

-- Better health care could mean a more healthier population, thus making U.S. workers for productive

-- August Aquila, President and CEO, Aquila Global Advisors

We have many clients in our health care practice and they are all quite concerned and interested in the economic effects of health care reform. Generally, businesses are going to have to supply more financial support under the legislation, and small to medium-sized entities will be particularly impacted. While insurance pools and other cost-cutting devices will level the playing field somewhat, the bottom line will be affected for all businesses. The businesses of the United States have a great tradition of providing for the health of workers, but the costs have risen to the point where the burdens need to be shared across the public and private sectors and through new, creative insurance mechanisms. I believe the reform legislation attempts to provide for this, but it will be up to business to get creative and find new ways to spread the impact of health care costs.

-- Andy Armanino, CEO and managing partner, Armanino McKenna

The health care reform legislation will have a very significant impact on firms and their business clients, and the overall U.S. economy. Clients will look to their CPA firms to help manage these changes, and it will be critically important for firms to leverage technology to successfully manage this dynamic environment for their clients.

-- Erik Asgeirsson, CEO, CPA2Biz

Until the implementing regulations are finalized and businesses adjust to the new requirements, it is premature for me to speculate on the effects.

-- Robert Attmore, Chairman, GASB

Very negative, as it injects uncertainty and risk into the private sector, the same environment FDR created in the 1930s that prolonged the Great Depression. I agree with P.J. O'Rourke of the Cato Institute: "If you think health care is expensive now, wait until it's free."

-- Ron Baker, Founder, VeraSage Institute

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