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Opportunities Seen for Health Care Reform Bipartisanship

By Stephen Miller, CEBS  7/22/2013
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With the delay in the employer coverage mandate until 2015, increased attention is being paid to possible reforms that could improve the workability of the Patient Protection and Affordable Care Act (PPACA or ACA) and rein in the growth of health care costs, said Joel White, president of the not-for-profit Council for Affordable Health Coverage (CAHC), speaking at a National Press Club news conference on July 16, 2013, in Washington, D.C.

The delay in the coverage mandate and related employer-reporting requirements, affecting organizations with 50 or more full-time equivalent employees, means that “all of us are trying to make sense of where we stand and where current events may be leading us,” White said.

He noted a series of unresolved challenges involving health care reform—from implementation delays to the failure to address cost containment—and explained why he is optimistic that Democrats and Republicans can find a way to address these issues.

“Employers are looking at cost containment strategies largely by shifting costs onto consumers,” White noted. This has resulted in employees paying a higher percentage of health plan premiums, higher deductibles and more out-of-pocket expenses.

CAHC’s research shows that increased health care costs related to the ACA have led to decreased employment “on the order of two full percentage points,” and that “this burden falls heaviest on those on the lowest rung of the income ladder. Despite the improving headline job numbers, full-time employment in the U.S. is actually falling as the number of part-time employees, who are not subject to the employer mandate, is increasing.”

Moreover, “Concerns about employers dumping high-cost employees onto the [health care] exchanges are very real.” In particular, he noted, early retirees (prior to Medicare eligibility) are expensive to insure, “so employers who have made commitments to the early-retiree population through post-retirement health benefits are now seeking to offload these costs onto federal taxpayers.”

Overcoming Gridlock

“Democrats contend that the law will run well and will benefit most people. Republicans are predicting catastrophe and pledge full repeal or defunding of the law, which is an unlikely political outcome. Despite well-known problems with the law and its implementation, stuck in between these two conflicting political camps are real people who will experience real pain as a result,” White said.

Behind the scenes, White has found more tempered attitudes. He described Democrats on the Hill as “pensive” and “hoping for more successes than failures as the law is implemented.” Republicans, for their part, “have seen their early pretensions of bulldozing the ACA dashed,” and are quietly reassessing the “repeal or die” strategy.

“There are a number of Republicans who are signaling a desire for bipartisan action to mend some of the ACA’s worst flaws,” said White, although “We may have to wait until the next election takes shape in order to get some true bipartisanship.”

Reining in Costs

“Ballooning private costs are the common enemy of both parties’ ideological agendas. It is this practical, shared concern, in the end, that I believe will bring them together,” White observed.

In 2002, the all-in cost of family-of-four coverage equaled about 18 percent of the average typical family’s income, he pointed out. “This year, it’s about 35 percent of that family’s income. That’s equivalent to about a 17 percent payroll tax increase over that timeframe, a massive hit on a family’s finances. These cost impacts are real and poignant.”

If health costs continue to grow at the same rate they did in 2012, “a year when many were trumpeting their average slowdown, this all-in cost is going to equal half the median income in 2020, and about two-thirds of the median income in 2026. This is a crisis.”

Unfortunately, “The ACA is at its heart an unwieldy subsidy machine. It is designed to ameliorate the effects of runaway medical spending, but does very little to contain their cost.”

The good news, White observed, is that “we have a fair idea of why health costs are increasing: we don’t have competitive health markets in this country. According to the Federal Trade Commission, only 5 percent of hospital markets are competitive by the FTC’s standards. Market dominance has given hospitals the ability to raise prices four to five times faster than personal incomes over the past several decades.”

Moreover, “Hospitals are buying up their outpatient competitors in the market; we’re seeing mergers and acquisitions, and an increased market concentration at the local level.”

“What these trends tell me, related to inflation and market concentration, is that the next focus on health care policy is the competition challenge. Here I see fertile ground for bipartisan collaboration,” White said.

Increasing Transparency

Other than regulatory reform, one means of fostering increased competition is to improve the access to comparable price and quality data. “This initial first step would allow consumers, employers and health plans to receive additional data and know exactly what it is they’re buying,” he said.

For employers and health plans, transparent information “means they could steer employees and consumers to more efficient, higher quality providers and away from those who provide suboptimal care.”

“Transparency is a bipartisan issue,” White emphasized. “There is a host of information paid for by taxpayers, sitting with the Centers for Medicare and Medicaid Services, that we would like to unleash,” allowing people to make better sense of the health care system.

Other initiatives being worked on include delivery reforms to promote better patient adherence to treatments through Medicare and Medicaid, “and there is broad bipartisan support for that effort.”

Finding common ground on “the ACA’s more harmful cost increasing provisions—the cap on small-group plan deductibles that is driving up premiums; the lack of flexibility in benefit and coverage design—could spawn bipartisan compromise,” White noted.

He warned, however, “The act, and the economy itself, could very quickly be overwhelmed if Republicans and Democrats do not actively embrace reforms that do what the act did not do, which is to control the health costs behind the demand for redistribution. And I think therein lies the logic of compromise.”

Put simply, “cost-shifting from consumers to taxpayers is not a cost-containment strategy. Getting to sustainability will require new bipartisan reforms, the case for which is, quite simply, that we have no choice.”

Unions Voice ACA Complaints

In a development that could add momentum to bipartisan efforts to revise the health reform law, the leaders of three influential labor unions with close ties to the Democratic party—the Teamsters, the United Food and Commercial Workers (UFCW) and Unite Here—sent a letter dated July 11, 2013, to Senate Majority Leader Harry Reid and House Minority Leader Nancy Pelosi arguing that the "unintended consequences of the ACA are severe" for union members.

Among the union leaders' complaints: "the law creates an incentive for employers to keep employees’ work hours below 30 hours a week. Numerous employers have begun to cut workers’ hours to avoid this obligation, and many of them are doing so openly. The impact is two-fold: fewer hours means less pay while also losing our current health benefits."

The union leaders also expressed their concern that nonprofit health plans governed jointly by unions and companies under the Taft-Hartley Act would not be eligible for federal subsidies.

Subsequently, on July 25, the head of the Laborers International Union of North America sent a separate letter to President Obama and congressional leaders stating that the ACA has “destructive consequences” for the types of health plans that cover millions of unionized construction workers and their family members.

Stephen Miller, CEBS, is an online editor/manager for SHRM.

Related SHRM Articles:

Health Care Law's 30-Hour Rule Under Fire, SHRM Online Legal Issues, July 2013

Health Care Law's Employer Mandate Delayed, SHRM Online Benefits, July 2013

Critics Say PPACA May Encourage 'Part-Time Society,' SHRM Online Legal Issues, May 2013

Employers Reconsider Retiree Medical Strategies, SHRM Online Benefits, October 2012

Health Care Consumerism Needs Transparent Cost, Quality Data, SHRM Online Benefits, April 2011

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SHRM Online Health Care Reform Resource Page

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