Employment and Health Benefits A Connection at Risk (1993) / Chapter Skim
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7 FINDINGS AND RECOMMENDATIONS
7 FINDINGS AND RECOMMENDATIONS
Pages 229-261
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From page 229... ...
Beginning in the 1930s and 1940s, voluntary private initiative combined with some indirect regulatory stimulus helped produce for millions of Americans a remarkable breadth, quality, and depth of medical care and medical expense protection. In the mid1960s, the nation reached a consensus that public programs were necessary to finance appropriate coverage for the elderly (through Medicare)
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From page 230... ...
In particular, the findings do not address the most effective means to limit the rapid escalation in health care costs and define the appropriate role of advanced technologies, two issues that trouble all economically developed countries, regardless of their system of medical expense protection. In addition, the discussion here does not touch directly on the problems facing Medicare, Medicaid, and other public programs, although the committee recognizes that efforts to resolve these problems cannot go forward in isolation from the system examined here.
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From page 231... ...
The troublesome problems of biased risk selection and risk segmentation have been examined, along with some proposed responses to these problems. Finally, concerns about the level and rate of increase in health care costs and the means of controlling costs have been explored.
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From page 232... ...
They often help employees understand their health coverage and resolve problems with specific health plans. Employers have become increasingly active in the management of health benefits by offering employees choices among competing health benefit plans that limit employee choice of health care practitioner, adding managed care features to indemnity health plans, and developing workplace health promotion programs.
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From page 233... ...
In general, the problems and options regarding health coverage faced by small organizations differ in significant ways from those faced by larger organizations. Many proposals for health care reform are particularly targeted at small employers.
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From page 234... ...
Access to preventive and primary care services is much more difficult for the uninsured, although public and private outpatient programs and charity care offered by individual practitioners do help some needy individuals who lack health coverage. Extending health insurance to the currently uninsured population would not guarantee adequate access to appropriate health services, but it almost certainly would assist them in obtaining preventive and primary care that could improve their health status and quality of life.
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From page 235... ...
as a basis for health insurance has mitigated the problems of risk selection that plagued initial private efforts to insure individual expenses for medical care. It has offered an alternative to government mandates but still created purchasers with more leverage than single individuals can normally bring to bear in buying health insurance, identifying and resolving problems and securing effic.ien .
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From page 236... ...
Although federal law limits the use by employers of medical examinations and questionnaires, employers can generally obtain from their health plans extensive medical information about employees and their families. They have the potential to use that information to make overt or covert decisions about workers' continuing employment, a particularly troublesome form of risk selection.
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From page 237... ...
It also leaves employers free to require employees to select insurance or show evidence of another source of coverage, and many employers do so in order to discourage adverse selection in the organization's health benefit program. Although the structure may not give as much discretion to the employee as to the employer, the employer may be in a better position than the individual to use its purchasing power to secure better prices, services, and disclosure of information from health plans.
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From page 238... ...
, the design of employment-based health benefit plans is quite dynamic, inventive, and changeable over time. Compared to other nations, the United States has witnessed great innovation and entrepreneurship in the creation and marketing of health plans and coverage options and in the design or modification of cost containment and quality assurance strategies.
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From page 239... ...
Such discontinuity of care for those with serious health problems is likely to become an increasingly urgent issue as more employers and health plans attempt to restrict individuals to defined networks of health care practitioners and providers, especially if they periodically drop and add networks. Through both their general commitment to universal coverage for basic health services and their national health plans or regulatory standards for sickness funds and similar organizations, other economically advanced countries generally limit the opportunity for changes in job status or employers' policies to interrupt care or coverage.
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From page 240... ...
It is generally assumed that a single national health insurance scheme similar to Medicare would generate lower administrative costs. Today, whether a government program or a more competitive market would better control the total future cost of health care is a central question in the debate over health care reform.
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From page 241... ...
Individually purchased insurance, while certainly not simple for consumers to evaluate, is less administratively complex in some respects-if only because individuals lack the leverage and the desire to obtain the customized cost management, data collection and reporting, and other health plan features that many employers successfully demand from insurers and providers. On the other hand, it cannot be denied that Medicare has created a complex maze of accountabilities and administrative procedures that dismays both beneficiaries and health care providers and that equals or exceeds the complexity of individual employer programs.
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From page 242... ...
and practical grounds (i.e., 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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From page 243... ...
The committee agreed that what follows should not be interpreted as either an endorsement or a rejection of employment-based health benefits. 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.
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From page 244... ...
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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From page 245... ...
To reduce risk selection and 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 also 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 differentials.
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From page 246... ...
Even if explicit medical underwriting disappears, the health benefit costs of experience-rated and self-insured employers will be affected by the health status, age structure, and other characteristics of the work force. Thus, some may still be tempted to reduce their exposure to high health care costs by using information obtained through their health benefit plans to discriminate against high-cost and high-risk workers.
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From page 247... ...
Taken together, the above steps should provide individuals with new protection from restrictions on their access to health coverage related to their past, present, or expected future health status. 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.
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From page 248... ...
. ~ ~ ~ .1 _ _ ~ ~ _ _ ^~ _ ¢~ TO A +~ i:_;+ ~ would be necessary probably through amendments lo ~K1~^ 10 alma one 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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From page 249... ...
To make such experimentation and learning possible, ERISA would need to be amended either to provide authority for specific state experiments or to create a process by which the Department of Labor could grant waivers for experiments meeting certain criteria. In the committee's view, a waiver should be available only for comprehensive state-level experiments intended to extend access to effective health services, control risk selection, and improve the value obtained for health care spending.
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From page 250... ...
These members would prefer, on balance, relatively uniform federal policy to define and govern the basic terms on which health care coverage is provided, priced, financed, and administered. For some the basic terms would be those generally proposed by advocates of managed competition; for others the terms would involve a single national health plan.
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From page 251... ...
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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From page 252... ...
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 practitioners or providers)
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From page 253... ...
The primary appeal of the proposals that provide a significant role for employment-based health benefits is that they would continue a familiar structure that is, in general, viewed favorably by most Americans. This structure provides many employees with an accessible source of information and assistance in making health plan choices and resolving problems.
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From page 254... ...
Because the committee could not undertake an evaluation of the cost containment potential of the many proposals for fundamental health care reform, this report must remain silent on a central issue in the debate over reform. As policymakers and others make judgments and define policies to influence health care costs, they should be guided by informed understanding of the systemic factors behind rapidly rising expenditures and a realistic sense that their proposed reforms can affect at least some of these factors and give the nation more confidence in the value received for its health care spending.
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From page 255... ...
· What special characteristics of group or network health plans must be considered (e.g., cost sharing and coverage for in-network versus out-of-network care)
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From page 256... ...
· Should self-insured employers be exempt from comprehensive state programs to restructure the health system and extend health benefits for most residents? aThis assumes that many underwriting practices are eliminated, as described in the findings presented in Table 7.2.
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From page 257... ...
Some of the more robust adjusters (e.g., past use of health services and certain health status measures) may create undesirable incentives for health plans or be impractical to implement on a routine basis.
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From page 258... ...
The dimensions of the issues include consumer and patient preferences and capacities for decisionmaking; practitioner attitudes, behaviors, and capacities for decisionmaking; the state of technology assessment and the knowledge base concerning effectiveness and outcomes, including measures of health status; cost-effectiveness analysis; the state of the art in actuarial modeling to project the implications of alternative benefit packages; ethical perspectives; legal considerations; and administrative feasibility. Therefore, another research priority is an assessment of the evidence base and methodologies specified or implied by different proposals for standardizing health plan benefits, their potential to limit or exacerbate biased risk selection, and their likely impact on health care costs, health outcomes, and patient/consumer satisfaction.
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From page 259... ...
The amount of discretion that employers might retain concerning their health benefit program under the "offer all" approach is not clear. Currently, when employers drop and add network health plans, they may work with the plans to ease the transition for some patients, such as those who are pregnant and whose obstetrician is not part of the new network.
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From page 260... ...
Despite the diversity of its views on specific directions for health care reform and the role of the employer, the committee would not like to see lost the assistance that employers can bring to employees facing problems with their health coverage. Because neither a single national system nor a competitive market based on individual (not employer)
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From page 261... ...
Given the creativity shown by both public and private sectors in the past and the considerable accomplishments of employment-based health benefits, there is reason to be optimistic that decisionmakers if they can agree on a basic framework for reform can find a positive role for employers. That role may be larger or smaller than it is today, but in either case it should be designed to support the country's broad objective of securing broader and more equitable access to more appropriate health care at a more reasonable cost.
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