By Jane Bryant Quinn
Sunday, June 8, 2008
Chattering health-care policy wonks think we're at a "tipping point." The employer-based health-insurance system, they say, is going down. It costs too much, stops workers from moving to new jobs and leaves too many of us uninsured.
That's all talk, says Paul Fronstin, director of health research for the Employee Benefit Research Institute in Washington, which studies economic security. It's just not happening. Employers see their benefit programs as a way of attracting and keeping better workers. They also are doubtful about the alternative -- a government-run, Medicare-ish program whose costs and benefits they can't control.
Although companies want to keep their hand in, they consider the current system unsustainable, Fronstin says. They also know that tinkering won't change the picture. Instead, today's corporate chieftains are backing some surprising fundamental changes.
They've floated their ideas in a proposal called the New Benefit Platform for Life Security, developed by the ERISA Industry Committee, or ERIC. The committee represents the nation's major employers. ERISA is the federal law that regulates employee benefits.
ERIC contends that health care should be delivered through large, third-party benefit administrators, all of them competing for the business. A government-authorized entity would design three to five standard health plans, with input from all the stakeholders (medical, consumer, insurer, employer and regulator). Employers would have the option of keeping their current plan or -- as ERIC expects -- contracting for coverage through the new system.
The hope is to strengthen the employers' hand. On their own, "even large companies don't have much negotiating power when facing large health plans," said ERIC President Mark Ugoretz. Big regional benefits administrators, with huge pools of employees, should be able to strike better deals.
To Fronstin, the ERIC plan is a way for employers to step away from offering health benefits directly. "It's significant in the sense that you have employers saying, 'We can't do this anymore; we have to change the way we're doing it,' " he said.
What do the corporations want from health-care providers that they're not getting now? Smarter cost controls, expanded health information technology, administrative efficiency and a clearer look at whether the plans are cutting costs by cutting corners.
"Plans should not be financially advantaged simply because they become expert in denying payment for legitimate claims or they are slow or sloppy in their adjudication practices," Ugoretz said.
Individuals, the self-employed and small businesses would also be able to buy into plans run by benefits administrators.
Although everybody talks change, ERIC's proposal is just one entry. No consensus has emerged on what a new system should look like. One reason is that not enough voters are desperate enough to gamble on a change.
The majority of workers -- 71 percent in 2005 -- have access to health insurance through a job, a relative's job or their own, EBRI reports. That's down from 75 percent in 2000, so it's normal for these employees to worry that any fundamental change will make things worse.
Among large employers, benefits are almost universal. Smaller firms usually provide them, too. Only the micro-firms (fewer than 10 workers) have passed the tipping point: just 45 percent cover their workers today, compared with 57 percent in 2000.
Small businesses aren't contributing much to the discussion of fundamental change. They would also like multistate plans but within the present system. Their efforts are bent toward reducing state oversight so they can offer cheaper, less-comprehensive coverage.
Bare-bones policies might raise the number of insured. (I say "might" because subsidized state small-business pools haven't been successful.) They would also reduce the number of people insured against chronic or expensive diseases such as diabetes or breast cancer. That's no advance.
All the presidential candidates are addressing the question of universal health coverage, in one form or another. That alarms the factions who worry that change will come at their expense.
In the early 1990s, when the Clinton health-care plan was on the agenda, the opposing groups cranked out press releases, claiming to have better proposals of their own. As soon as the Clinton plan went down, the press releases stopped.
I thought about that when I got a release from the National Federation of Independent Business supporting a system that's universal, private, affordable, efficient, realistic, blah, blah, blah -- what I call adjective-based reform. The NFIB commissioned a study, and I wish them well, but they're not thinking outside the box. What's interesting about ERIC is its fresh approach.
One type of company coverage that has passed the tipping point is subsidized health insurance for retirees. Fewer than half of large employers now provide it, said Ron Fontanetta, a principal at the consulting firm Towers Perrin in New York. Of this group, most are covering their current retirees. But only 67 percent say they'll offer retiree coverage to the people working there today, and fewer than half will cover new hires. You can be sure that those percentages will go down.
The more that businesses retreat from their workers and retirees, the bigger the constituency for government-based overhaul. That might be the best option in the end. If not, serious businesspeople, like those in ERIC, need to get cracking on universal care right now.
Jane Bryant Quinn, author of "Smart and Simple Financial Strategies for Busy People," is a Bloomberg News columnist. Alexis Leondis in New York contributed to this column.