Employer Coalition Springs Up Over Health-Care Costs

May 10, 2004 (PLANSPONSOR.com) - Two new employer coalitions have formed to combine their collective health-care buying clout to affect change in the ever-escalating health-care costs.

The two coalitions will create alliances among employers, health-care plans, and providers-hospitals and physicians. These three-way partnerships will help fill the insurance gap for many workers and their dependents that are currently ineligible for employer-sponsored coverage or cannot afford individually underwritten health insurance, according to a news release issued by HR Policy Association.

Specifically, members of the Affordable Health Care Solutions Coalition have agreed to pool their affiliated uninsured workers and dependents to create a single group currently estimated at four million people nationwide. They include:

  • part-time employees;
  • contract and temporary workers;
  • independent agents, consultants, and vendors;
  • pre-65 retirees who do not have group options;
  • employees currently in a waiting period;
  • COBRA participants who have exhausted their 18-month coverage; and
  • students who are no longer eligible under their parents’ health care plan.

The coalition will then seek bids from health plans, ultimately selecting one that will offer health insurance coverage at a lower cost than what is currently available in the individual insurance market and with fewer barriers to entry.

Additionally, members of the two coalitions will combine their purchasing power on a region-by-region basis to generate premium discounts and administrative cost savings for employers, employees, and small businesses in the area. These regional groups are purchasing coalitions in areas where the Association’s member companies employ “a substantial percentage of the workforce,” the release said.

Membership in the two coalitions so far include more than 50 Fortune 500 companies, HR Policy Association, a group comprised of the senior HR executives of more than 200 companies , said in the release. Among the members are:

  • American Airlines
  • Caterpillar
  • Emerson Electric
  • Ford Motor
  • General Dynamics
  • General Electric
  • The Home Depot
  • Honeywell
  • IBM
  • McDonald’s
  • Prudential Financial
  • Texas Instruments.

The Affordable Health Care Solutions is being designed and structured by human resources outsourcing and consulting firm Hewitt Associates, under the direction of HR Policy Association. To make the coverage more attractive, Tom Beauregard, lead health care strategy consultant for Hewitt, said, “The group is seeking guaranteed issue of some coverage benefits regardless of pre-existing conditions, and will work with the consulting firm and the health plan to streamline underwriting to cut costs.”