The Council’s proposals build on the employer-based health care system which is now the primary source of coverage for most Americans, but also includes means for those who are not covered by an employer-based system to obtain meaningful, affordable coverage. In addition, according to the report, the Council believes health care reform includes taking steps to make health care more affordable and of higher quality.
ABC’s first prescription is Build on What Works. The report says building on the employer-based system is the best foundation for health care reform because employers have strong incentives to offer health care coverage to recruit and retain a talented workforce, and “employment-based health coverage also broadly pools health risks and lowers administrative costs for health coverage.” The Council also suggests an employer-based system engages employers to find strategies for keeping their workforce healthy and employers are highly motivated to improve the management and delivery of the coverage they sponsor.
However, ABC says: “Mandating that employers provide a minimum level of health coverage is neither necessary nor appropriate.” Large employers competing in a global marketplace should not be subject to costly mandates that would make American products or services less competitive or that may encourage them to move some of their workforce outside of the U.S., and smaller employers that are already constrained by limited resources should not be required to provide coverage they cannot afford, according to the report.”
The Council suggests that health reform solutions focus on strategies to make health coverage as affordable as possible for all employers and improve the individual insurance market so that a basic benefit plan is available to those outside of the employer-based system.
The ERISA Framework
In its report, “Condition Critical: Ten Prescriptions for Reforming Health Care Quality, Cost and Coverage,” The American Benefits Council suggests a single set of federal rules rather than a state-by-state approach for health care reform is essential because it is the most efficient, least complicated way for employers to sponsor health coverage, and it translates into better benefits and lower costs for employees who participate in these plans.
ABC says it strongly supports the federal regulatory framework established by the Employee Retirement Income Security
Act (ERISA). “This framework plays a critical role in encouraging employer-sponsored health coverage by embracing the common sense concept that employer-sponsored benefits ought to be subject to a single set of rules.”
The Council recommends that federal health care reform initiatives should not establish ERISA waivers, “carve outs,” or similar provisions that would permit state or local regulation of employer group health plans, and any new federal rules should promote simplicity and flexibility, as well as minimize additional costs and maximize the health and financial security of Americans.
While the American Benefits Council's prescriptions for health care reform are based on the employer-sponsored system of coverage, they include a suggestion that individuals be responsible for obtaining coverage. "[E]stablishing a universal obligation for all individuals to obtain and keep coverage is essential if we are to reach the widely shared goal of covering all Americans," the Council's report says.
Obligating individuals to obtain coverage is also "the right thing to do," according to ABC because the costs of uncompensated care are shifted to employers, insurers, individuals, and the government.
The Council suggests health care reform should:
- Establish a federal obligation for all Americans to obtain at least a minimum level of health coverage;
- Permit individuals to meet their coverage requirement through employer-based health coverage or other sources;
- Connect individuals to appropriate sources of coverage if they fail to make a coverage decision on their own;
- Provide income-based premium subsidies to make health coverage affordable; and
- Apply subsidy payments to employer-sponsored coverage when it is available.
If individuals are obligated to obtain coverage, then another prescription for health care reform must be to improve the individual insurance marketplace for those that do not have access to employer-sponsored coverage, according to ABC.
Recommendations from the Council for doing so include:
- Ensure access in all states to a basic benefit plan in the individual insurance market through a product that meets federal minimum coverage requirements;
- Provide states a range of options to ensure that a basic benefit plan is available in the marketplace;
- Make high risk pool coverage affordable and available in all states; and
- Facilitate enrollment into an individual market basic benefit plan or comparable coverage in a state high risk pool.
In its report, the Council recognizes that, "Unlike coverage for active workers, employers and employees lack tax-favored funding vehicles to enable them to contribute for future retiree health care coverage."
It recommends improving tax preferences for retiree health insurance to make coverage more affordable, and providing employers and employees with better options for funding retiree health care needs. According to ABC, these options should include:
- allowing pre-tax payments of retiree health premiums from a defined benefit or defined contribution retirement plan;
- permitting employees qualified for a 401(k) catch-up contribution to designate a limited amount to retiree medical;
- lowering the health savings account (HSA) catch-up contribution age from 55 to 50 and permitting tax-free distributions from these accounts for retiree health premiums before age 65 ; and
- allowing employers to pre-fund retiree health benefits using Voluntary Employees' Beneficiary Associations (VEBAs).
The American Benefits Council's proposal includes a number of "prescriptions" related to improving the quality and cost of health care and system efficiency.
One suggestion by the Council is that "a nationwide interoperable health information network should be adopted by a specified date to permit the exchange of vital health records and patient information much more efficiently and to provide a backbone for a wide range of emerging quality improvement initiatives."
ABC also says a system is needed to make price and performance information easily accessible to consumers. A transparent system would allow consumers to not only find affordable care, but allow them to locate high quality care; allow health care providers to compare their performance with other professionals; and protect patients from unsafe or unproven care, among other things, the Council report notes.
ABC also makes recommendations for establishing a minimum coverage standard. It suggests a two-step process in which step one would be to define by legislation each of the broad categories of coverage that should be included in the minimum benefit requirement. Step two would be to establish a broad multi-stakeholder advisory panel that would make consensus recommendations on more discrete aspects of plan design such as appropriate limits on cost sharing for different categories of coverage; advise on ongoing implementation issues as a minimum benefit standard is introduced in the marketplace; and make annual recommendations on changes in cost-sharing or other aspects of the minimum benefit standard in order to keep a basic benefit plan affordable.
As for health care costs, ABC says its supports maintaining the ability of employers to deduct their expenses for health coverage to employees, as well as retaining the employee tax exclusion for health coverage obtained through employment. The Council suggests a reformed health care system should allow employees to pay their share of health insurance premiums on a pre-tax basis, and provide comparable tax preferences for coverage purchased in the individual insurance market.
The report was developed by the American Benefits Council's board of directors and contains 44 specific recommendations for consideration in an economic stimulus bill or comprehensive health care reform legislation.
The report is here .