Mutually exclusive goals?
Forty-five million Americans are without health insurance, a number that is expected to climb to 54 million by 2019. Universal coverage is expected to cost more than $1 trillion in the first decade. Recognizing the current state of the economy, President Obama has pledged that any proposed program must be "deficit neutral."
Employer focus
National health care reform is the answer; paying for it is the question
The Obama Administration has made comprehensive health care reform and universal coverage a legislative priority for 2009. The timing may be right. Increasingly concerned about premiums that have doubled in the past decade, employers are unhappy with the status quo and eager for new solutions to control health care costs.
Expanding coverage: what's on the table
Several key ideas are being discussed on Capitol Hill, including:
- Establishing a national health insurance exchange or supermarket for buyers and sellers. Individuals, especially the uninsured, could select from a variety of health plans that would pool the risk and offer benefits at group rates. A new government insurance option or public plan, potentially modeled after Medicare, could be one of them. The public option would compete with private insurers.
- Mandating individual health care coverage in the same way that states require drivers to purchase automobile insurance.
- Requiring employers to offer a certain level of coverage. Those who did not "play" would "pay" a penalty, perhaps in the form of a higher payroll tax. The revenue generated from this tax could help finance subsidies for the uninsured.
- Establishing a minimum level of health coverage for all Americans by having the federal government mandate a basic plan design.
- Correcting the current tax bias favoring employer coverage so that the same tax-free benefits are available to individuals.
Containing costs: what business groups are saying
The Society of Human Resource Management (SHRM), the Business Roundtable and the National Business Group on Health, among others, agree with President Obama that reducing costs should be integral to national health care reform to slow down or reverse the current trends.
The Business Roundtable, an association of CEOs of leading U.S. companies, attributes much of the dramatic rise in health care costs to uncompensated care, which shifts costs from the uninsured to the insured. Maria Ghazal, director of public policy for the Roundtable, suggests one helpful step the government could take - sign up the estimated 11 million people who are eligible for SCHIP (State Children's Health Insurance Program) and Medicaid but have not enrolled.
Business groups believe a combination of strategies would have a beneficial impact long term, including "health IT" to create a more efficient system with fewer errors, Consumer Driven Health Plans to make patients more cost-conscious and medical liability reform to reduce insurance costs that are passed along in higher physicians' fees.
Lisa Horn, manager of health care in SHRM's government affairs staff, also has faith in wellness and disease management programs to ultimately shift the emphasis from expensive hospital-based acute care to prevention. She admits, however, that it is hard to pinpoint savings from these programs in the first few years. "Wellness is so new for some and metrics aren't completely in place," she says. "HR professionals struggle with the ROI."
Financing health care reform
Policymakers face a similar dilemma in documenting projected savings for their cost-cutting proposals. Despite consensus for reform, the big challenge will be how to pay for it. President Obama has proposed $634 billion in new taxes, plus cuts in Medicare and Medicaid, to finance reform. But new sources of revenue are needed to cover the shortfall.
Items being targeted include:
- Tax-free treatment of employer-provided coverage is at the top of the list. Hoping to recoup annual tax revenue of $245 billion, legislators may consider turning this sacred cow into a cash cow.
- Treating employer health care coverage like group life insurance benefits. If the employer's premium contribution is above a certain dollar amount, employees would have to pay income tax on the excess.
- Phasing out the tax break on employer coverage for high income individuals.
- Introducing a cap on itemized deductions for those in the highest tax brackets.
Gaining support from the business community for these initiatives will be tough. The National Business Group on Health is opposed to "pay or play" policies and eliminating the current tax exclusion for employer contributions to employee health benefits. SHRM and the Business Roundtable are taking a wait-and-see approach, preferring to see the federal government's total package before taking a stance.
The time for national reform of health care may be right but, as always, the devil is in the details.
Many of the concepts in this article are excerpted from a webinar presentation by Jim O'Connell, executive consultant to Ceridian, sponsored by Minnesota Life in May 2009. View the full presentation.
Resources
The White House's health reform web site.
"The Imperative for Health Reform: The Position of the National Business Group on Health," www.businessgrouphealth.org.
"Health Care Reform in America: A Business Roundtable Plan," www.businessroundtable.org.
