Employment and Health Benefits A Connection at Risk (1993) / Chapter Skim
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Pages 1-24
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From page 1... ...
These feelings feed back as further reason to worry about the structure of health care delivery and financing, including its link to the workplace. Many proposals for health care reform would replace existing arrangements with fundamentally different relationships among patients, medical
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Others would put the cost-conscious individual consumer at the helm. Yet others would mix strong government regulations with market competition among certified health plans.
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Key Statistics The relative importance of private and public sources of health benefits and health care spending is suggested by the following statistics: · Seventy-three percent of all Americans below the age of 65 have private health coverage, the great majority through programs sponsored by private and government employers and unions.
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· Ninety-six percent of all Americans age 65 and over are covered by public programs, many have supplementary private coverage (some of it employer sponsored) , and only 1 percent have no health coverage.
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Moreover, large employers have become increasingly active in health benefit management by offering employees choices among competing health benefit plans, limiting employee choice of health care practitioners, adding managed care features to indemnity health plans, and developing workplace health promo
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6 EMPLOYMENT AND HEALTH BENEFITS: A CONNECTION AT RISK TABLE 1 Broad Functions or Activities That May Be Undertaken by Employers Providing Health Benefits, Arrayed by Approximate Level of Administrative Difficulty or Complexity LEAST DIFFICULT OR COMPLEX MOST DIFFICULT OR COMPLEX Direct Contracting with Health Care Providers or Direct Provision of Health Care Services Direct Administration of Claims, Utilization Review, and Other Management Functions Extensive Tailoring and Detailed Oversight of Health Benefit Program Contributing to Plan Premium, Monitoring Basic Aspects of Health Plan Performance, Assisting Employees with Problems Facilitating Participation in Health Plan: Enrollment, Information Distribution, Payroll Deduction lion programs. At the same time, large employers are focusing more than ever before on how they can have employees pay a larger share of costs directly, how they can get the best possible rates from health care providers regardless of the impact on others in the community, and how they can avoid sharing the risk for medical care and benefit costs for anyone other than their employees and, perhaps, their dependents.
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Should the employer have a major role in a market-oriented approach? Would, on balance, the projected effects of one or another kind of reformed market be better or worse than the effects of major alternatives, which occupy a spectrum of possibilities from the current system on the one hand to a single payer, single national health plan on the other hand?
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Most of these characteristics distinguish the system in the United States from systems in other advanced industrial nations and from what is envisioned by proposals for a fully public system of health insurance or for a private health insurance market based on individual choice and responsibility or some combination of these principal alternatives. They are not, however, purely a function of voluntary employment-based health coverage.
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Risk Selection and Discrimination Biased risk selection is always possible when individuals, employers, or other groups can choose whether or not to buy health coverage or whether to select one health plan rather than another. Unfortunately, this continual exercise of choice a valued feature of individual liberty and of markets generally can create both philosophical and practical problems in the health care arena.
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At their worst, employers may arrange coverage through corrupt or incompetent sources, discriminate against employees on the basis of health status, and terminate benefits unilaterally. Diversity Although patterns have developed that are associated with variations in employer size, region, industry, and other factors, virtually every employer's program of health benefits differs from every other employer's program in some aspect (e.g., who is eligible for coverage, through what kinds of health plans, for which kinds of services, with what level of employee cost sharing and other cost containment features, and at what overall cost)
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Sometimes financial protection is continuous following a job change, but the continuity of medical care is still disrupted because the new job's health plan requires a change of health care practitioner. Such discontinuity of care for those with serious health problems is likely to become an increasingly important issue as more employers and health plans attempt to restrict individuals to defined networks of health care practitioners and providers.
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Some or most of the negative features of the U.S. system are nonexistent or less serious in other economically advanced countries and might be completely or partly resolved by certain kinds of health care reforms, including some that would retain a significant role for employers.
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and practical grounds (believing that competition based on risk selection should be discouraged in favor of competition based on effectiveness and efficiency in managing health care and health benefits)
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On the one hand, a substantial minority of the committee believes employment-based health coverage is, on balance, not socially desirable, except perhaps as a financing vehicle and a supplement to a national health plan. In contrast, other committee members believe that an employment-based system can-if significantly restructured serve the country as well or better than the likely alternatives and that such restructuring is the most workable strategy for securing reforms that move the nation toward universal coverage.
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for risk adjusting employer and government contributions to health plans to reflect the risk level of enrollees; and · extend public subsidies to help employers, employees, or both purchase health coverage for workers and their families. · Discontinuity National (ERISA)
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To reduce risk segmentation in the insurance market for small groups, one step that policymakers can take is to prohibit insurance companies from denying coverage to groups and individuals within groups on the basis of their past or expected health status or claims experience. In addition, what an individual pays for health coverage should not, in principle, be based on her or his health status, past medical expenses, or similar factors, although the initial stages of policy change and implementation may concentrate on the narrowing of price dif ferentials.
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Absent movement in that direction, regulatory, educational, and other efforts to discourage discrimination by both employers and health plans have an important role, although covert discrimination is always difficult to detect and eliminate. Risk-adjusted employer or government contributions to health plans An end to medical underwriting may diminish one source of risk segmentation in a competitive market, but it would leave other sources unaffected.
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However, they are unlikely to eliminate completely the advantages health plans receive from favorable risk selection and the incentives for plans to engage in the selection strategies described in Chapter 5. To further discourage discrimination against higher risk individuals or "skimming" of lower risk individuals, it will probably be necessary to monitor health plan enrollment and disenrollment patterns and their marketing, management, and other strategies.
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However, further action would be necessary probably through amendments to ERISA to limit the use of waiting periods and other health plan provisions that may interrupt coverage and thereby discourage labor mobility and permit some continued degree of risk selection by employers and health plans.
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The committee, however, acknowledges that the changes discussed in this section and the next are unlikely as long as policymakers lack a realistic financing strategy that they feel is feasible politically. Furthermore, it may be important to consider employer reactions to health care reforms that limited employers' involvement in managing employee health benefits and assigned them only a voluntary or nonvoluntary financing role (e.g., a direct premium contribution or payroll tax)
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Although the committee did not examine the problems of the self-employed and those with no connection to the workforce, it believes that the arguments for universal coverage apply to these groups as well. One rationale for requiring health coverage lies in a major limitation of a voluntary system that precludes medical underwriting.
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From page 22... ...
Depending on its specific features, an individual mandate could make universal the problems of risk selection now found in the individual purchase of insurance or it could attempt to control them through the kinds of features described in the preceding section. A unified national system following the Canadian model would eliminate risk selection by eliminating choice among health plans (but not choice among individual practitioner or provider)
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From page 23... ...
Some are already the subject of much attention, whereas others have, as yet, been little emphasized. In summary, they involve the following five areas: methodologies for risk adjusting payments to health plans, consequences of underwriting reforms, challenges and options in defining basic benefits, · employer assistance with employee decisionmaking and problem resolution, and · continuity of patient care in the context of multiple choice among network health plans.
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choice, employers might very well see advantages in a new kind of "employee assistance program." This program could provide employees with aid in understanding their health plan coverage or help in resolving problems with denied claims, bureaucratic inertia, or whatever similar difficulties a reformed system might present. Furthermore, the committee would not like employers to become unconcerned about the link between health coverage, health status, and worker well-being and uninterested in efforts to improve assessments of the costeffectiveness of specific medical services and health care providers.
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