Tuesday, November 17, 2009

Where We Sit and Where We Stand

Some large groups of employers are sounding the alarm about the health reform provisions of the House’s Affordable Health Care for America Act, H.R. 3692.

For example the American Benefits Council, a group that represents large employers including 25 insurers and major health benefits consultants, in a November 12 conference call told its member participants that the Council opposed the House bill because it…
– continues unsustainable health costs;
– includes an employer “pay-or-play” mandate” with a minimum benefit package provision
– requires employers to continue existing retiree health benefits provisions;
– includes a public plan option that would increase cost shifting to private payers;
– lacks incentives for wellness programs;
– does not address medical liability reform.

In a November 5 four-page letter to Speaker of the House, Nancy Pelosi and House minority leader John Boehner, the Council wrote: “We believe the bill does not accomplish the bipartisan goal of controlling health care costs and will significantly add to the burdens and costs for employers who are the primary source of health coverage for more than 160 million Americans. As a result, we believe that the bill is likely to destabilize employer-sponsored health coverage which has driven much of the innovation and progress toward quality improvement in our health care system today.”

By innovation, they must mean the very creative consumer-driven health plans (CDHP), that is, high-deductible health plans, with either a health reimbursement account (HRA) or a health savings account (HSA). A new survey from Aon Consulting and the International Society of Certified Employee Benefits Specialists finds that employers who sponsor a CDHP prefer an HSA to an HRA. HSA plans generally cost employers a lot less and their contributions to employees’ HSAs often are much lower than their contributions to HRAs.

But then, benefits brokers and consultants and plan sponsors agree that plan design changes and cost sharing will continue to be among the most common approaches for controlling benefits costs, Prudential Financial’s Expertise is Essential study .found. The same study’s finding that benefits brokers and consultants are more likely than plan sponsors to emphasize cost containment strategies including cost-sharing and consumer-directed plans is telling..

“The Council firmly believes that the best reform options are those that preserve and strengthen the role employers play as the largest source of health coverage for most Americans,” the Council’s letter to Ms. Pelosi and Mr. Boehner continued.. “By keeping employers engaged as sponsors of health coverage, we also retain the expertise and commitment employers bring to the table in the collective effort to find practical, focused solutions to the challenges facing our health care system.”

In many ways, though, employers need not worry. As we discussed in a previous post, the minimum benefit standard set forth in the House bill would be based on employer plan designs. On the other hand, the reforms that the House bill would require employers to implement immediately upon enactment, give employers cause for concern. .

Many large employers oppose H.R. 3692’s ERISA reforms that would ultimately impose minimum benefit requirements on self-funded health benefits plans, as well as minimum actuarial value standards, and the minimum premium contribution requirements. Currently, ERISA protects self-funded employer plans (covering 57% of workers with employer-provided coverage) from state regulation and requirements. A report from the Business Roundtable, prepared by major benefits consultant Hewitt, identifies some of the same concerns as those the “Council” cites.

On the other hand, the Center on Budget and Policy Priorities points out, small business has more to gain from the House health care reform bill, which contains provisions designed to help small businesses provide their employees with health care coverage...

Obviously, what we see depends on where we sit and where we stand.


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