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. *

U.S. employers want to provide health insurance

The Wall Street Journal has a good article today, by small business reporters Emily Maltby and Sarah Needleman, about three smallish businesses grappling with the the Affordable Care Act's employer mandate, which charges employers with more than 50 employees $2,000 per employee (excluding the first 30) if they don't offer coverage.  None of the business owners opt not to offer coverage. Here's the head of a small pizza chain with 90 hourly workers:

Next year, Mr. Stark intends to offer a health-insurance plan for the first time to comply with the law. "At the end of the day, if we take care of our team members, they will take care of the guests," he says. "I philosophically believe people having health care, regardless of age, is positive."

A consultant with 93 employees adds:

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?