Sunday, October 04, 2009

Self-funded employers against the public option

Last week, Matt Miller expressed incredulity that the major business lobbies would help shoot down the Wyden Free Choice Amendment to the Baucus bill, which would enable all employees to opt out of their employer's health care plan and buy insurance on the insurance exchanges that the various health care reform bills will establish for the uninsured. Miller forecast:

Big business thinks that giving employees this choice would be a calamity. To which one can only ask: Have these business lobbies lost their minds?

When the post-mortems on the health-care reform debate are written, the biggest mystery will be why big business fought so hard to stay in the health-care business even as soaring health costs surpassed corporate profits and diverted executive time better devoted to actually running companies.

Excellent question. Miller can only speculate that corporate human resources chiefs have sold their companies a bill of goods. And that seems to be the case on another health care reform front: employers apparently also don't want their self-funded plans to be subject to competition from a public option, i.e. a government-administered plan offered on the new insurance exchanges.

More than half of Americans who get their health coverage through their employers work for companies that self-fund their own health plans, usually hiring an outside company to administer the plan. The organization representing such plans and the companies servicing them, the Self Insurance Institute of America, is dead-set against the public option, apparently fearing it would trigger a stampede out of employer-funded plans.

Why? As reported by Matt Brodsky of Risk & Insurance, Cliff Roberti, chief lobbyist for the group, recently issued a warning at the group's annual meeting:
Not to be "overly dramatic," said Roberti, addressing an audience of SIIA members, but if healthcare reform take a partisan turn (meaning the passage of government-run insurance plans), a lot of people at the conference could be in another business in two years.
Who might lose their jobs if employees stampeded out of employers' health plans? SIIA members include company executives who oversee self-funded plans (as well as at captive insurance companies, generally used for property/casualty insurance); Third Party Administrators (TPAs), the entities that run these plans, which include both subsidiaries of major health insurers and stand-alone companies specializing in this service; and stop-loss insurers, which offer coverage for big losses to self-funded plans. The SIIA website defines its constituency as follows:
If your company is a self-insured employer, group fund (SIF), third party administrator, stop-loss/excess insurance carrier or provider network, SIIA' s government relations services are a tremendous membership benefit.
Are corporate America's interests really aligned with those of TPAs and stop-loss insurers? Is corporate policy on this front really driven by HR executives, as Matt Miler suggests? Why is the prospect of reduced employer responsibility for employees' health care so threatening to employers?

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