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CCH® BENEFITS — 1/16/08

Mercer Finds Lack Of Consensus Among Employers About Health Care Reform

From Spencer's Benefits Reports: Play-or-pay health care systems fail to get support nearly equally from small employers and from large employers (those with at least 500 employees), according to recently released data from a Mercer study conducted in the summer of 2007. Only 23% of small employers and 25% of large employers support such an option, Mercer found. In Massachusetts, which implemented a play-or-pay system in October 2006, support is slightly higher at 30%, but that support is significantly lower than the 49% in 2006. “This may reflect dissatisfaction with tougher-than-expected reporting requirements for all employers, including those opting to ‘play,’” said Blaine Bos, a Mercer worldwide partner and spokesman for the survey.

Instead, employers favored tax credits to reduce the number of the uninsured, another Mercer survey conducted in 2006 revealed—67% favored such a measure, and another 21% strongly favored it. Employers responding to the 2006 Mercer survey also favored additional tax incentives to promote greater adoption of health savings accounts (HSAs), with 54% favoring it and another 17% strongly favoring it. However, unlike in the 2007 survey, more than two-fifths of the 2006 respondents said that they approved of a Medicare-like federally financed system for all Americans (32% approved and 11% strongly approved).

“Lack of employer consensus underscores the challenge of curing the health insurance system’s ills,” Mr. Bos noted. Since employers are the major source of health insurance for the majority of workers and their families, their opinions in the health care reform proposals likely will help shape the debate, he pointed out.

Employers’ opinions on the major state and federal health care reform proposals largely depend on the number of workers at a firm, Mercer found. Mercer asked a random sample of employer health care plan sponsors with at least ten ten employees whether they favored or opposed key elements of state health care reform laws or proposals, some of which also are being considered for federal action. Among the options explored were play-or-pay laws and mandating that individuals buy insurance at specified levels of coverage and cost, as well as three less prevalent reform proposals. “The lack of consensus revealed by the survey is a good indicator of just how difficult finding a solution continues to be,” Mr. Bos observed.

The larger the employer, the less likely it was to favor any of the reform initiatives other than individual mandates. Among the largest employers (those with at least 20,000 employees), only 13% supported play or pay reforms, as did 27% of employers with at least 500 employees, compared to 23% of employers with fewer than 500 employees. However, more than two-fifths (42%) of large employers disapproved of such laws. “This is somewhat surprising, given that requiring that all individuals have coverage could relieve existing employer plans of cost shifting from the uninsured,” said Mr. Bos. “The difference in opinion is likely because most large employers are already fully committed to providing coverage but want to retain flexibility and control over the coverage they provide and to avoid the burdens and complications of complying with numerous state mandates.” As the National Federation of Independent Business confirms, small employers generally are most concerned about the affordability of coverage, Mercer’s survey indicates.

State health care reform initiatives are much less popular with larger employers, which are concerned about proposed ERISA preemption waivers and being subject to multiple, varied state initiatives, than with small employers—65% of the largest employers disapprove of state health care reforms, while 42% of the small employers approve.

NBGH Members Respond

A survey jointly conducted by the National Business Group on Health (NBGH) and Mercer of NBGH members revealed the health care reform perspective of the group’s typically very large employer health plan sponsors. Of the 50 NBGH member companies that responded to the survey, the great majority (80%) believed that employers should continue to have responsibility for providing health care coverage to their employees, and of those, half believe that it should be a requirement. In fact, three-fifths of the NBGH respondents said that, even if the United States adopted a single-payer system with universal access, they would continue their role in ensuring employee health, primarily by providing specific health management services to improve work force health and productivity (60%) or by providing supplemental coverage to maintain employees’ current level of coverage (23%).

The NBGH respondents strongly favored individual mandates—81% agreed that individuals not covered through an employer or government plan should be required to purchase coverage on their own. However, fewer than one-fifth of the NBGH respondents believed that “employer and market actions alone could mitigate the need for government-led reform within the next five years.”

Furthermore, only a small minority (22%) of NBGH respondents believed that universal access should be one of the primary goals of government-led health care reform. Instead, these respondents believed that the government’s health care reform focus should be to improve the efficiency of care delivery (73%) and the quality of care (67%) and to lower or stabilize cost growth (43%).

“If we are going to get anywhere, we as a nation need to simultaneously improve the quality and safety of health care and reduce or eliminate cost drivers,” stated NBGH president Helen Darling. “At the same time, we need to expand access to affordable, effective, and efficient care.”

For more information on the two Mercer surveys, visit http://www.mercer.com.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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