Las Vegas law firm Marquis & Aurbach spends more on health insurance than it pays for office rent.
And with some provisions of the federal health-insurance overhaul bill set to take effect in September, that gap probably will grow. The firm must renew its coverage in November, and executives said they fear the worst when new premiums kick in on Jan. 1.
"I haven't had anyone willing to tell me how much our costs might rise, other than to tell me it's going to be ugly," said Terry Coffing, the firm's president and managing partner. "We're hoping the horror stories we have heard will be modified or are overblown, but we're not optimistic."
The overhaul bill won't be in full force until 2014, but some of its rules are in place now, while others go live in September and January.
A Medicaid drug-rebate program expanded in April, while a high-risk insurance pool for adults with pre-existing conditions launched in June. Set to kick in next month are policies that allow adults up to age 26 to stay on their parents' insurance, ban pre-existing conditions in kids under 19 and prohibit annual insurance-spending caps. Coming in January: a regulation requiring employers to disclose health benefits' values on employees' annual W-2 tax forms.
The bill also includes a few already-active tax credits to help subsidize premiums. Businesses with 10 or fewer workers averaging less than $25,000 in annual pay qualify for a credit covering 35 percent of insurance costs. A partial credit is available for companies with 25 or fewer workers who earn $50,000 a year or less on average.
Like Marquis & Aurbach, some Nevada employers and insurance brokers say they're already seeing the results of 2010's health care changes.
After years of flat or small increases of less than 8 percent a year, insurance premiums at Sonoma Circuits in Sparks are set to jump 33 percent when the company renews its plan in September, said President and Chief Executive Officer Gary Wilson.
Wilson said his insurance brokers told him the overhaul bill is behind the big gains. To cover the higher expenses, Sonoma Circuits has switched to high-deductible plans and will ask its nine employees to pay 30 percent of their premiums, up from no employee contributions right now.
"The bill has already affected us. We don't have nearly the funding we had for new product lines," Wilson said. "Research and development costs money, and you can't get financing for research and development. We're in disaster mode right now. Our planning is for a worst-case scenario."
But not all businesses report feeling fallout from the bill.
At the 45-employee Wright Engineers in Las Vegas, owner Brent Wright said he's "very concerned" about the law, but the firm hasn't yet fielded any premium increases or insurance changes as a result of the law's provisions.
Nor has Penta Building Group in Las Vegas experienced any "tangible effects" of the law, said John Cannito, vice president of finance and corporate services. Penta is scheduled to renew coverage for its 95 workers in December.
"Our insurance broker has indicated that we want to be prepared, because we're not sure what's going to happen," Cannito said. "We expect to go out to a few more insurance carriers than we have in the past to get as competitive a rate as we can."
National reports show those insurance carriers are already modifying their offerings to adapt to health care changes.
Insurers in Florida and Oklahoma said in July they'd stop issuing new policies that cover children individually, because of the ban on pre-existing conditions. Insurers said the ban will allow parents to wait until their kids get sick to buy coverage. Blue Cross and Blue Shield of Florida estimated that practice could raise overall individual-policy premiums by as much as 20 percent.
And a July report from the New York Times noted that big insurers are promoting affordable plans with lower premiums and narrower doctor choices to help curb cost increases. The move could require patients to pay more out of pocket to keep their physicians.
Just how those plan changes will filter down to Nevadans won't be clear until late 2010 at the earliest, said Eric Springall, president of Orgill/Singer Insurance in Las Vegas.
"They're writing the standards on how the bill is going to be implemented, and that's where the rubber meets the road," Springall said. "There are a lot more questions than answers at the moment. It'll be into the fall before we begin to see some clarity on what to expect."
Though it's tough to predict the magnitude of the changes, Springall said Orgill/Singer's brokers do expect the bill to force modifications in plan designs and increases in premiums later this year.
Some companies can already say exactly how the law touches them.
Marquis & Aurbach became self-insured several years ago, but under new rules, the firm's current coverage isn't acceptable, partly because of issues related to out-of-network care and partly due to eligibility rules requiring a minimum number of hours worked to qualify for benefits. On top of looming large premium increases, the firm may be looking at eliminating some coverage to save on costs, Coffing said.
And while the company pays 100 percent of its employees' premiums and subsidizes costs for dependents and families, that may have to change, with employees chipping in on their own premiums and family subsidies ending.
"We're hoping some change will be effected before the worst is implemented," Coffing said.
At Las Vegas accounting firm Fair, Anderson & Langerman, premiums jumped upon renewal at the beginning of 2010. Tax partner Jason Thomas said he believes the increase may have come in anticipation of the bill, and clients and associates are reporting similar trends.
"There's no doubt this has already had an effect, and it's been pretty rapid," Thomas said.
For small businesses and startups in particular, the toll could be heavy, he added. After September, employers must cover preventive costs that insurance policies don't pay for, and that expense will provide one more barrier to new businesses or new coverage.
But hardest of all is uncertainty surrounding the rest of the bill's implementation, Thomas said.
"Some questions have no answer yet, and that creates an environment that is difficult to plan for," he said.
The Associated Press contributed to this report. Contact reporter Jennifer Robison at jrobison@reviewjournal. com or 702-380-4512.