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Employers Hope to Alter Health Care Reform
Changes sought to coverage mandates, reporting requirements, penalties and taxes

By Stephen Miller  11/18/2010
 

Following Republican gains in the U.S. midterm elections, the desire of U.S. employer organizations to make substantial changes to the health care reform legislation passed in March 2010 was the focus of a panel discussion at the National Business Coalition on Health's 2010 annual conference, held Nov. 11-12, in Washington, D.C.

"Maybe now we can have a conversation between the two sides. Maybe one of the positives of the election is that it will result in a better answer from us, the American people," said Larry Becker, director of strategic partnerships and alliances at Xerox.

Wish Lists

After a widely anticipated effort in early 2011 by the Republican-controlled House to repeal the Patient Protection and Affordable Care Act fails in the Democrat-controlled Senate, "we have our list and we're checking it twice," said Randy Johnson, senior vice president for labor and employee benefits at the U.S. Chamber of Commerce, referring to modifications in the law that he believes could attract bipartisan support. In the short run, he expects to see "even more confusion for the business community" over the future of health care but also "an opportunity to make improvements" in what the Chamber views as a deeply flawed law.

Johnson said the Chamber's top priorities are:

Repealing the 2014 employer mandate to provide coverage or pay a penalty.

Repealing the 2018 excise tax on high-value (so-called "Cadillac") health plans.

Among more targeted initiatives, he pointed to:

Repealing the 2011 tax form 1099 requirement for all vendor transactions above $600.

Repealing the 2011 exclusion on purchasing over-the-counter medications using flexible spending accounts and health savings accounts.

"Possibly" changing the 2012 requirement to report the value of an employee’s health benefits on individual form W-2s.

Maria Ghazal, director of public policy at the Business Roundtable, an association of CEOs from large U.S. companies, said she would like to see "implementation of the law in the least disruptive and least costly way." While faulting several aspects of the legislation, she noted that there was "high enthusiasm for its wellness and prevention provisions among our members."

Other top priorities for the Business Roundtable, Ghazal said, are:

Passing medical liability reform, including a safe harbor for health care providers following best-practice guidelines. Ghazal called liability reform "an underused piece of limiting health care costs."

Adding incentives for more consumer choice and engagement, "such as with the use of health savings accounts," and "giving employers the tools to manage their health benefits more effectively."

"More options, not fewer, are key to stemming the rate of health care cost increases," Ghazal said. She expressed the hope that the midterm elections might create "an opportunity to create more competition" under health care reform.

"Make sure the money is spent well. Let's make sure we get value added," said Xerox's Becker. He called for "getting transparency around cost and quality to consumers and providers so that, at every point, patients have access to the data about providers. And providers who have authorization ought to have access to patient data."

Excise Tax

On the 2018 excise tax on Cadillac plans, Becker noted that there would be "two major elections between now and then. That [tax provision] may change."

Ghazal pointed out that excise tax calculators are available online and that "companies are looking at the tax. Generally, everyone's evaluating it," but whether they'll respond by lessening the value of their health benefits or dropping coverage is uncertain.

"Many employers are surprised to find they'd be considered a Cadillac plan," said panel moderator Cheryl Demars, CEO of The Alliance, a cooperative of employers seeking to control health care costs with improved quality and individual engagement.

The Chamber's Johnson noted that, under the health care law, the excise tax doesn't take effect until 2018 "largely due to union pressure." How unions respond as 2018 approaches could be key to the future of the tax, he observed.

Grandfathered Status

Addressing the issue of whether or not to maintain grandfathered status, most large employers "are leaning toward not staying grandfathered because of the economic issues involved," said Becker, pointing to the "need to raise employees’ share of premiums due to rising health care costs."

"Generally, our companies have moved on" regarding the loss of grandfathered status, concurred Ghazal, adding of the grandfather provision, "it's almost as if you need an advanced degree to understand it."

Pay or Play?

Johnson noted that a 2010 survey by consulting firm Mercer indicated that a fifth of U.S. small employers (those with 10 to 499 employees) were likely to terminate their health plans, especially those with low-paid workers and high turnover, under the "pay or play" rules that take effect in 2014, the same year that state-run health care exchanges launch. "Others are planning to stay below 50 employees to avoid the no-play penalty," he added.

Johnson dismissed the small business tax credits provided under the reform law (to encourage small businesses to maintain coverage) as "extremely limited and virtually useless, in the view of the Chamber's small business members."

"All the Wrong Incentives"

Also addressing the National Business Coalition on Health's annual conference, Richard Umbdenstock, president and CEO of the American Hospital Association, took aim at how health care providers are paid in the U.S.—i.e., fee-for-service reimbursement—by private insurers and by Medicare/Medicaid, which he termed "all the wrong incentives."

"When you reward volume, you get volume," Umbdenstock pointed out. "You get what you pay for—overutilization." A different set of incentives geared to pay for quality, such as outcome-based pay using comparative evidence data, along with cost- and quality-focused value-based purchasing, could help stem unnecessary tests and procedures and bend the cost curve down, he noted. 

NBCH President and CEO Andrew Webber discusses medical payment reform in this SHRM video clip.

Stephen Miller is an online editor/manager for SHRM.

Related Articles: 

For U.S. Employers, Health Care Excise Tax Is the "X-Factor," SHRM Online Benefits Discipline, November 2010

112th Congress Likely to Emphasize Oversight of Health Care Reform, SHRM Online Legal Issues, November 2010

Rethinking Health Care Strategy in the Age of Reform, SHRM Online Benefits Discipline, October 2010

SHRM Health Care Poll: Employers Respond to ChallengesHR News, September 2010

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