Trade Group Argues for Employer Health System Retention

January 19, 2010 ( – An employer trade group has sent a letter to the Obama Administration asserting that the final health-reform bill should continue to support employer-based health coverage.

The letter from the ERISA Industry Committee (ERIC) also expressed the group’s concern about the future viability of the employer health system if particular aspects of the reform plan are enacted.

“The employer-based system in this country rests on the foundations of national uniformity, affordability, voluntariness, and the ability to spread risk across the entire employee population.  These principals must be maintained in order for the employer-based system to continue to provide 170 million Americans with efficient, effective, and high quality health care,” said ERIC President Mark Ugoretz, in the letter.

The document warned that several proposals in the House and Senate bills now being reconciled threaten to undermine the national uniformity guaranteed by 30 years of federal law.  According to Ugoretz, “the state waiver provisions, internal and external appeal requirements, and the application of state remedy laws open the door to curtailing the uniform regulatory structure that lowers costs, lessens administrative burdens, and allows employees to keep their coverage if they move.”

ERIC contended that a “restrictive” employer mandate would end the ability of employers to configure compensation and benefits tailored to the needs of their workforces. “Unless employers are able to align employee benefits and compensation with changing economic circumstances, no employer will commit to long-term obligations,” Ugoretz said. 

The ERIC letter also expressed reservations over the excise tax on high-cost plans that the group said will lead to an overall reduction in health coverage offered to employees.  The so-called “Cadillac tax,” Ugoretz said in the letter, “ultimately will be borne by employees as well as employers. This additional tax burden will not be paid out of some hidden pot of money that employers maintain for rainy days.  Rather, it is a cost that ultimately reduces wages, benefits, or the number of employees on the employer’s payroll. This is a provision that will cost jobs and weaken, not strengthen, the nation’s health care system.”

Finally, ERIC said that employer-provided plans must still be able to spread risk over large pools of employees.  Any proposal that would give incentives to healthy employees to leave the employer-sponsored coverage for cheaper coverage through health-coverage exchanges, the group argued, would cause premiums to skyrocket.

The letter is available here