|
|||
|
|
|
||||||
|
Health Reform is a Threat
The proposed bills add costly new regulatory and administrative burdens that create significant uncertainty and will cause many employers to weigh their long-term business health-plan strategies, according to this opinion piece. The rationale for continued health coverage may be hard for some organizations to swallow and it is highly possible many will discontinue their health plans -- and instead opt to pay a fee to the federal government.
The quest for health reform by a divided Congress is echoing loudly across the employment-based landscape. The direction of House and Senate legislative proposals threatens to undercut the existing employer-based system and does little to improve health quality or contain costs. Congressional proposals would establish a new government-centric healthcare system composed of state-based health-insurance exchanges; employer "pay or play" mandates; a new federal health-insurance entitlement program with subsidized coverage, excise taxes and fees on insurers and employers, and expanded eligibility for Medicaid. The Congressional Budget Office estimates a net cost of $774 billion over 10 years for the proposed expansions in insurance coverage, credits and subsidies. With vastly more people covered by the current employer-based health system than are outside that system, it is no surprise that millions of Americans view the cost and benefit impacts of these proposed changes with growing skepticism and suspicion. Unless drastically revised -- just as the Employee Retirement Income Security Act was overhauled in conference committee 35 years ago -- the pending legislation poses a real threat to the future employment-based healthcare system. A new federal structure and costly new regulatory and administrative burdens create significant uncertainty that will cause employers to weigh their long-term business health plan strategies. In this respect, the rationale for employers to continue health coverage may be hard for some to swallow and it is highly possible that many will discontinue their health plans -- and instead opt to pay a fee to the federal government. Although Congress is divided and a final outcome is far from decided, the disturbing government-centric direction of the pending bills and their devilish details impacts significantly on employer-sponsored plans that now cover 165 million people. Key Components Four key common components of the 253-page plan unveiled by Senate Finance Committee chairman Max Baucus and the massive tri-committee House bill (H.R.3200) illustrate these concerns: * Starting in 2013, all Americans would have to enroll in a health-insurance plan meeting minimum federal standards or face a financial penalty. * New insurance reforms affecting such practices as guaranteed issue, pre-existing medical condition limits, medical-loss ratios and rating would go into effect in 2013. * A system of new state-based health-insurance exchanges through which individuals could access subsidized health insurance would be established. * A "pay or play" provision would require employers to offer health insurance coverage or pay a fee to the federal government. In addition, the House bill calls for a controversial "public plan" run by the U.S. Department of Human Services to be offered in the exchanges; the Baucus bill does not include the public option but instead calls for nonprofit health cooperatives. On a preliminary basis, the nonpartisan Congressional Budget Office estimates the Baucus plan will have a $463 billion cost impact in federal subsidies for coverage through the new insurance exchanges. While slightly less onerous than the House measure, the Baucus plan would significantly raise the cost of employer-provided healthcare by imposing a variety of fees, taxes and penalties on employers, particularly firms with many lower-paid employees and very little participation in their health plans. CBO estimates the revenues from the excise tax on high premium insurance plans ($8,000 for single policies and $21,000 for family policies) would be $274 billion over a 10-year period. The 35-percent excise tax proposed by Baucus on "high-cost" plans will dramatically affect employers sponsoring plans for employees. This is a cost that must ultimately be borne by employers and employees because it is a tax that will either reduce wages, benefits or the number of workers on employer payrolls. The Baucus proposal also calls for an assessment totaling $20 billion to fund a new government high-risk pool for individuals. Health insurers and self-insured employers would be required to contribute to this pool starting in 2013. While hardly a model of clarity, the ambiguous language in the 1,000-plus page House bill and the Baucus plan would significantly impact the existing system; the diverging provisions also set the stage for troubling, conflicting interpretations of complex provisions that will ensure lucrative future employment for countless attorneys and lobbyists. Impact on Employer-Based System
There is ample evidence that the overall impact of the both the House and Senate bills would diminish the major role of the employment-based system.
First, a new federal legal structure would be created that is superimposed over current law. Because ERISA does not pre-empt other federal laws, the new federal provisions would apply to insured plans as well as self-insured plans that cover nearly 75 million individuals. New federal insurance standards designed primarily to eliminate certain restrictions and practices under insured plans would apply to self-insured plans as well, thus eroding the important distinction between insurance and self-insurance as funding methods for health benefits. Among insurance reforms under discussion are pre-existing condition exclusions, provider-network adequacy rules, prompt pay, claims external-review procedures and subrogation. Second, the House bill would allow for waivers from ERISA federal pre-emption. While not in the Senate bill, this misguided provision opens the door to state health-reform efforts that would further undermine an original purpose of existing federal law aimed at promoting uniform, cost-effective national benefits across state lines. Third, the proposed House "pay or play" provision calls for employers with annual payrolls of at least $400,000 to elect qualifying coverage or pay an 8-percent payroll tax. Employers could elect to cancel coverage in exchange for paying a tax. Moreover, states would be allowed to move ahead with their own employer mandate efforts, posing a serious problem for uniform health benefits sponsored by multi-state employers. The Baucus plan does not explicitly require employers to offer health insurance, but employers with more than 50 employees who do not offer coverage would be subject to a penalty for any workers who obtain subsidized coverage through the insurance exchanges. While the future of this provision is uncertain, it would open a crack in the "firewall" between the exchanges and the employer plan (for workers who have to pay more than 13 percent of their income for employer coverage). As for the specifics, eventually all employers would be allowed to transition into the government-supervised exchanges; employees of existing plans can migrate at any time. The CBO says only 12 million to 15 million people would migrate by 2017, but the Lewin Group puts the figure at 83.4 million people, or nearly half (48 percent) of covered employees. Exchange-based plans must offer a federally approved minimum "essential benefit package" for "core" and "tier" coverage. State-mandated benefits would be included in the basic package and the Department of Health and Human Services could add additional benefits such as substance abuse and mental health. While some of these changes will provide greater access to health coverage for the uninsured, such reform will come at a significant cost. CBO estimates the House proposal would result in federal budget deficits of over $1 trillion (that's 12 zeroes) over the 2010-2019 period, including about $773 billion in federal subsidies for insurance purchased in new exchanges. Considering proposed offsets, the House package under discussion would drive up future deficits by $240 billion or more -- hardly a ringing endorsement for cost containment.
Strengthen Employment-Based System
A recent Washington Post-ABC poll concludes most Americans believe current reform proposals will make their own health coverage worse. Surveys say that three of four individuals under age 65 have employer-health coverage and that the overwhelming majority are generally satisfied with benefits they get through their employment. Evidence submitted during hearings underscored that the federal framework now regulating the job-related health-benefits system can be strengthened in a multiplicity of federal laws including ERISA. New incentives to stimulate transparency and greater use of technology to control healthcare costs are also needed. Employers have been at the forefront adopting market-based cost-saving innovations, such as programs for wellness, disease management and pharmacy management. With greater employee engagement through social media, these programs can successfully address the nation's growing "disease burdens" (obesity, smoking, etc.) that adds billions of dollars to healthcare costs. A common sense innovation -- health-plan performance management -- utilizing social media as well as data and predictive-modeling analytic technology is showing early promise in reducing health costs -- without the expenditure of a single dime in government spending. New software programs can give employers the technical tools needed to manage their health plans just as they manage other aspects of their business. Employers proactively managing their plans with new technology report millions of dollars in cost savings. Finally, differing House and Senate bills set the stage for a conference committee to resolve differences so a final bill can be sent to the president for signature. The challenge for Congress is to walk a fine line by adopting needed reforms, while strengthening the current system. Congress should hold President Obama to his frequently stated promise that "if you like what you have, you get to keep it." It took Congress nearly 10 years get it right when it enacted ERISA -- a successful model of health reform. Let's hope that the "world's greatest deliberative body" gets it right again.
October 16, 2009 Copyright 2009© LRP Publications |
||||||
Print
Email
Write to the Editor
Reprints
|
||||
|
||||
|
||||
|
© Copyright 2010 LRP Publications. All rights reserved.
|
||||