NEW YORK — With just nine months before the Affordable Care Act comes into force and requires all medium- and large-sized companies to provide insurance for their employees, the steel industry is bracing for uncertainty.
An informal poll of steelmakers suggests that most companies will continue to offer their current plans, but that could change as becomes more complicated to provide insurance and perhaps more expensive. There are plenty of questions about how the plan will be enforced and what it will mean financially for companies in the steel industry, from family owned distributors to the biggest mills.
"Right now, it’s the ‘We’re not quite sure how it's going to work’ health-care act. ... Some things could be good; some things could be bad. But we don’t know how this is going to work," Burke Byer, president and chief executive officer of Cincinnati-based rebar mill and fabricator Byer Steel Corp., told AMM.
"There are guidelines, rules and penalties that we need to be aware of," Walt Robertson, president of Johnstown, Pa.-based Johnstown Wire Technologies Inc., said. "The challenge is for us is to maneuver through the options."
Although the plan’s details are complicated, companies with 50 to 200 full-time employees generally must pay more than 60 percent of their employees’ premiums, while those with 200 or more full-time employees will have to cover more than 72.5 percent of their employees’ individual health plans.
If health-care premiums rise because of the act, steelmakers will be forced to swallow the costs for their employees.
"The biggest issue is if the company has more than 50 full-time employees and they do offer insurance, they shouldn’t be so concerned about the coverage," consultant and columnist Gene Marks said to steelmakers at the American Wire Producers Association’s annual meeting in February. Rather, they should be concerned about the cost to the employees, which they would have to cover, he added.
But some steelmakers might simply ignore the law and refuse to pay for their employees’ insurance, Marks said. Companies with more than 50 workers that don’t offer insurance will be forced to pay a $2,000 penalty per employee by 2019, with the first 30 employees exempt—a cost that some might judge on balance worth paying.
"I think most employers are going to wash their hands of this, pay the penalty and give some type of compensation or allowance for employees to buy it on their own," Marks said.
The choice has left steel businesses conflicted: Do they keep their employees on grandfathered plans, deal with the extra paperwork and risk paying higher premiums, or swallow the penalty and send them out to the state-based exchanges?
"You (either) have to compensate your employees some amount to cover some gaps, and you’re also taking a paternalistic culture that we’ve had with employer insurance, (or) you’re pushing people out to the wolves," Byer said.
Some sources said they would continue to offer attractive plans despite the complications and cost threats because they value retaining experienced and skilled employees. "It’s very hard to get technical people in my industry. ... It takes five years to get one of them productive," Dennis Stump, president of fabricator Akron Rebar Co., Akron, Ohio, said. "I’m under the magic number of 50 (employees), so logically I don’t have to have my people covered. But I couldn’t retain them if I didn’t."
Many sources also said they wouldn’t change the health-care plans they already offer.
"(Our employees) don’t need the added stress of worrying about their families’ health. The fact that the government mandates it is irrelevant," Stump said. "It’s reasonable to assume that your employer provides it."
Some of the biggest problems, including the danger that premiums could weigh down company finances, might not manifest themselves until later.
"(In the) short term, I think (business owners) are going to continue to go with their own existing plans," Marks said. "But (in the) long term, as the plan becomes more refined and more complicated ... I think you’re going to see more employers opt out."