Employer involvement in worker health care needed

As an Expert Advisory Board member to the R.I. Health Benefits Exchange (now called Healthsource RI), I literally counted the seconds to predict how quickly my well-respected colleague Ted Almon would echo the sentiments of single-payer advocate Howard Dean that “we should divorce employees from employer-sponsored health insurance” (“Does employer-sponsored health coverage make sense,” July 22, 2013). Mr. Almon further states that “employers do not need to be involved in the health care of their employees.”
As a 30-year employee-benefit consultant to more than 1,000 companies, please allow me to elaborate on just a few of the major reasons why most employers are, and will continue to be, involved in the health care of their employees.
First, many employer groups today are looking for more control and accountability, not less, over their health plans and the overall well-being of their employees. With human resources managers keenly aware that a healthy workforce is a more productive workforce, today the majority of all employers now offer some type of Health Reimbursement Arrangement, Health Savings Account or Flexible Spending Account, alongside a comprehensive wellness program that provides measurable data and delivers meaningful results that will continue to strengthen the bond between employer and employee.
Across the country, the evidence is overwhelmingly clear, on the number of popular carrier-supported wellness programs, mobile and online wellness apps, and worksite wellness award initiatives (i.e. PBN’s own Healthiest Employers program) that will continue to enforce a key role between employer and employee.
Additionally, Mr. Almon comments that “most company benefits limit the employee choice of coverage to one or a very few company sponsored plans.”
Contrary to popular belief, most employees I work with actually appreciate the due diligence the decision-makers of a company perform in selecting the appropriate plans and coverages for their valued employees. To some employers, dropping coverage altogether and replacing a tax-deductible contribution with a taxable pay raise may seem appealing, but be careful for what you wish for. How difficult will it be for HR managers to manage 25 different plans for 25 different employees?
With employees not beholden to their employers for their coverage, all efforts to have any oversight on the cost control and quality of that coverage then goes away. Furthermore, at what point does productivity begin to decline because an employer must now address and manage issues on behalf of an employee who chose a completely inappropriate plan for them and their family members? There is a good deal of research that suggests that consumers’ choices may not be rational when the number of alternatives is large, the alternatives are complex, and the communication toward that information is limited.
For those small-employer groups that do not have the appropriate broker guidance and/or HR personnel, a smarter solution, rather than dropping coverage altogether, will be to purchase coverage as a group under the “defined contribution” approach. An employer will provide for a fixed-dollar, tax-deductible contribution toward the purchase of coverage, and then allow an employee to utilize those tax-free dollars to select the coverage most appropriate for their own individual or family needs through our state’s health benefits exchange (HealthSource RI).
Fortunately HealthSource will allow for one composite group invoice for all selected plans to make the “defined contribution” approach easier to manage. Whether the defined-contribution approach of purchasing employer-sponsored coverage becomes the popular choice for some employers, may become as unpopular as when the majority of companies switched from defined-benefit retirement plans to defined-contribution retirement plans. The future health-insurance market is likely to become more complex with full implementation of the Affordable Care Act. That complexity may reduce the ability of consumers to make rational, informed choices. Reducing that complexity, increasing consumer information, and providing consumers with the tools to assess their choices – as HealthSourceRI is attempting – will increase the likelihood of a well-functioning health insurance market.
The creation of two marketplaces – inside and outside the exchange – was meant to generate competition, not stifle it. Isn’t that why President Barack Obama himself stated, “If you like your coverage, you get to keep your coverage”?
Could you imagine the deterrent to innovation that would occur because some type of “central authoritative board” would have to approve every new product an insurer wanted to develop and deliver?
Today product development and delivery to the marketplace is moving at the speed of sound. Could you imagine having only one Ford or Chevy dealership in our state to purchase an automobile?
With respect to distribution costs, admittedly, as a paid consultant, I do have a self-serving interest in preserving employer-based coverage. But there is absolutely no comparison between what little brokers add to the cost of coverage for the service work and no-charge HR ancillary programs they deliver, as compared to the millions upon millions of dollars that the federal government (i.e. taxpayers) have awarded to the states to administer the new health care law. Fortunately I have complete confidence in HealthSourceRI Director Christine Ferguson and her team that she will deliver functionality, efficiency and value for these dollars to our local community.
Mr. Almon is well aware that I fully respect his intelligent and insightful views. In my honest opinion, when copying the framework for his federal law, I believe President Obama did not go far enough.
Like the 2006 Massachusetts law, he should have mandated that businesses with 11 or more full-time employees provide some level of coverage for their workers. Our neighbors to the north have achieved more than 98 percent coverage for their citizens, all the while earning a 16th place from the CNBC poll as “Top States for Business.” Hopefully employers will continue to provide meaningful health benefits to attract and retain their valuable employees, and like Massachusetts, our health benefit exchange becomes a model of competition and efficiency for the benefit of all citizens who live and work here. •


James J. Raiola is vice president of the Rhode Island Business Healthcare Advisory Council.

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