Health Reform Bills Harmful to Self-Insurance

Pending health reform bills, unless modified, would have a negative impact on self-insurance that works well for millions of Americans.

A government- run and financed Health Insurance Exchange would  allow ALL employers, including self-insured employers, eventually to access the Exchange.  Despite President Obama’s  promise that  people would be able to keep their current coverge under health reform, that would not necessarily happen.

Eligible individuals and employers in the Exchange could wind up with coverage that is different  from employees’ current coverage because Exchange insurance plans must comply with new requirements. (i.e. “federally approved “essential benefits packages”.)  Government officials could add  federal mandates ( i.e.mental health, substance abuse) to the minimum benefits package and state mandated benefits would also be included. 

The Lewin Group estimates 83.4 million people  eventually will migrate from private health plans (including self-insured plans) to the Exchange.

Playing games with the numbers, CBO estimates of migration are lower (10-15 million people), but CBO defines employment based coverage to include an unspecified number of people who would obtain coverage through the Exchange  onlyvia a financial contribution from their employer rather than actual employer plan coverage. In other words, the CBO estimate leaves open the possibility that a much larger migration from private will occur because an unspecified number of people would lose  coverage  provided directly by an employer.

These figures confirm that health reform bills would weaken the employer based system and have a harmful effect on self-insured plans.

 

 

RESPONSE TO WASHINGTON POST RE HEALTH CARE

I agree wholeheartedly with Mr. Steven Pearlstein’s comments in the Washington Post  today critical of  Mr. Charles Krauthammer’s recent observations on employer based health.

I believe the positive contributions of the employment based system in the health sector largely have been overlooked and that employers who cover millions of Americans and pay the lion’s share of the nation’s health bill have an important stake in seeing real cost savings and changes in insurance practices as vital components of health refrorm.

The evidence is strong that 5 out of 6 individuals under age 65 have job-related hralth coverage and that the overwhelming majority (80%) generally are satisfied with coverage they get through their employer. There should be no dispute that job-related health plans cover some 165 million employees and their families.  Bedcause we are not starting from scratch, the real challenge for Congress is to strike a delicate balance between needed reforms and building on the current employment based system that works well for so many people.

I agree with Mr. Pearlstein  who notes there is no evidence that the employer based system should be scrapped. Yet, the evidence is overwhelming that pending legislation, if signed into law, would make the employment based system a casualty of health reform–and would serve as a disturbing harbinger of future policy changes that would destabilize  rather than strengthen the private system.

Why not highlight valuable innovations in the current system, including private sector  programs for wellness, disease management, and RX drug management.  New predictive modeling and medical claim data analytics are showing impressive early promise in improving health and reducing costs–without a single dime of government spending.

The challenging policy question arises:  how to make rational decisions that walk a fine line between needed cost containment and insurance reforms and strengthening the current employment based health system.

Health Reform and Employer Plans

Pending House health reform legislation will add new costs, complexity and administrative burdens to the current employment based health system. The proposed Health Insurance Exchange initially would be open to individuals and small employers (up to 10 employees), but subsequently employer participation would be expanded to allow all employers access to the Exchange.

The Lewin Group estimates that 80 million people eventually will transition into the Exchange from private health plans. So much for the voluntary, private employer based health system which now covers over 160 million people.

The House bill also establishes a new federal agency to define an “essential health benefits package” to be offered in the Exchange. In addition to “federalizing” minimum health benefits, the bill allows other federal mandated benefits to be added by HHS.  State mandated benefits would also be included in the essential benefit package. So much for the flexibility now available to self-insured employers under ERISA to design health plans tailored to their specific workforce.

For over 30 years, employers have relied on the federal ERISA framework which has served as the cornerstone of the employment based system. It does not make sense that ERISA which works well for millions of people should become a casualty of health reform. It makes more sense that ERISA should be preserved and the employment based system should be strengthened as part of health reform.

 

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ERISA and Health Reform

Polls report that  5 out of 6 non-elderly Americans under age 65 have private employer health plan coverage and 3 out of 4 are generally satisfied with their health plans. 

Congress–often referred to as the world’s greatest deliberative body– took  nearly 10 years to pass  The Employee Retirement Income Security Act (ERISA), the federal law that regulates employer sponsored health plans.  ERISA is an overshelming  success story that  over more than 3 decades has  allowed thousands of employers to provide cost-efficent, quality health benefits to the majority of non-elderlyAmericans .

 Now, the ERISA employer  based health plans are threatened by hasty congressional action that would open the door to a more government-centric health care system.

Let’s not make ERISA a victim of its own success by destabilizing the employer based health system in the name of health reform.

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