Friday, May 31, 2013

Take two: Employers want to provide health insurance

Perhaps I buried my lede a bit yesterday in a post about the ACA's employer mandate. So let me try a carve-out.

Josh Barro, taking at face value some bitching about the requirement that employers with more than 50 full-time employees offer health insurance to their employees, recently charged that the mandate is a mistake and that health reform should have pushed health insurance away from the employer-employee relationship.

Defensible as that diagnosis may be in the abstract, voters at large were not the only constituency resistant to weakening the employer-healthcare bond.  Big businesses, and a not inconsiderable number of small businesses, values their role as health insurer, seeing that role as an important part of their bond with employees, as a competitive advantage, and increasingly, as an opportunity to make their workforce more productive  -- not to mention as font of a tax-free form of compensation.

Call them crazy, as Matt Miller did in October 2009 when the National Coalition on Benefits, an association purporting to represent the interests of employers covering 130 million Americans in the health reform process, helped to shoot down Senator Ron Wyden's Free Choice Amendment, which would have enabled all employees to opt out of their employer's health care plan and buy insurance on the insurance exchanges established by what later became the Affordable Care Act. The group's motto: Don't Erode What Works to Fix What's Broken. *

It's not surprising that HR executives would want to preserve the centrality of benefits as we know them in the employer-employee contract -- notwithstanding that doing so for the last 30 years has meant off-loading ever more cost and risk on employees. The Coalition worried, pragmatically enough, that allowing employees to opt out of employer health plans would result in "adverse selection," leaving them with a pool of sicker, more expensive policyholders, and weaken their purchasing clout. 

More fundamentally, though, the group spoke in defense of employers' role in providing fundamental benefits to employees. Here was its complaint, expressed in a 9/29/09 letter to the Senate Finance Committee:
The Wyden amendment would require employers who sponsor employer health plans to also offer their employees a voucher to leave the plan and go into the newly created exchanges. In effect, employers would be required to both “play and pay” for those employees who opt-out of their employer-sponsored plan an
d obtain coverage elsewhere.

This would result in widespread and sudden disruption in employer-sponsored health coverage. As some employees elect the voucher, those who choose to keep what they have will likely face higher premiums, reduced innovation, and/or lower benefits. The employer will face a diminished risk pool, the requirement to fund those both in and out of the plan, and a loss of flexibility to design plans that are cost-effective across their entire workforce. In addition, this provision would fragment an employer’s workforce into a multitude of different plans, undermining employers’ efforts to leverage their purchasing power to obtain the best possible coverage at the most affordable rates for their employees and fundamentally frustrate employers’ attempts to administer integrated health improvement strategies such as disease management programs and care coordination initiatives.

The Wyden Amendment fundamentally alters the primary roles and incentives for employers to serve as sponsors of uniform benefit plans for their employees. It would likely harm employer-employee relations because most employees have a longstanding expectation that their employer will be their primary source for health coverage.
That letter was signed by members of the Coalition Steering Committee, including the Business Roundtable, the National Association of Manufacturers, the National Retail Federation, and the U.S. Chamber of Commerce.

Yesterday's post led off with statements by smaller business owners, showcased by Wall Street Journal small biz writers Emily Maltby and Sarah Needleman, also expressing a sense of obligation and opportunity with respect to providing healthcare benefits. That's anecdotal, and a product of the reporters' selection.  But it does appear that more employers than not (or at least, employers of more works than not) share that internalized mandate.

For more on Barro's argument and the WSJ small biz interviews, see yesterday's post.

* What chiefly works, in the group's view, is ERISA, the federal ground rules for employee benefit provision.  That's a little odd, as the majority of big businesses self-fund their health plans, and self-funded plans are not subject to ERISA.  But what it chiefly aims to avoid is "proposed waivers that would prohibit preemption of state laws and open the door to liability actions against employers and health plans or permit state regulation in specific areas." Insurance is regulated by the states, and ERISA shields employers from being subject to 50 state mandates in their health plans.

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