Burda: Let’s pick up on that theme, and also one of the sausages being made, this idea that there could be a new government health insurance program for people who don’t qualify for Medicare or Medicaid and don’t have access to coverage through their employers. I know the health insurance lobby doesn’t think that’s a good sausage to make. Vicky, what’s your view on that?
Gregg: We’ve actually tried to take a step back and be thoughtful about it, and try to figure out is that something that really, in a meaningfully way, can push the agenda forward? From our perspective, and I guess some of the history with TennCare is we look at that. We really have questions about whether or not that’s the right step. Our concern is that becomes the focus of the reform, and that becomes the focus of the debate as opposed to some of these harder, tougher issues, which is how are you going to ultimately deal with cost-curving in healthcare?
We were very successful in expanding coverage. We then found ourselves in a situation where we couldn’t afford it because of the medical-cost trends. And then the debate became, you know: Who can do this best? Is it the state? Is it back to managed-care organizations? And that ended up, in some ways, becoming more of the focus as opposed to really rolling up your sleeves and saying, ‘What are the things that are driving this medical trend that we collectively need to be working together on regardless of who is somehow in the middle of this?’
So my concern is this whole issue around a government-run plan is much more about ideology than the practical aspects of making whatever it is that comes actually work in the marketplace and be sustainable for the long-term.
Burda: Larry, how do you think a new public program like that would affect your coalition numbers?
Boress: All of our members tend to be large, self-funded employers. So it tends to impact them more on their part-time people. And the biggest group at risk, that we think is the pre-65 retirees. Because if anything, employers are cutting back more and more on those kinds of people and on retirement. And in fact, you look 20 year ago, probably 67% of all employers offered some kind of retiree benefit. Now, it’s probably less than 30%, and in another 10 years, probably no one will cover retiree benefits. And the pre-65 people are getting hurt as well. So, I think there’s an interest, and, in fact, in a survey of our members of employers, we find there’s a recognition of a need to cover—to give people access to care. The question is: What should that look like? Who should do it?
We think an employer-based system has to be part of the solution. Most people who vote, most people who have care, don’t want to change that. They like their doctor; they don’t want to shift away to something different. That’s working, but for those people who don’t have coverage, for those people who can’t afford coverage, the government has got to provide something in there. But if they do that, then that also assists us in reducing the cost-shifting problem because we know that Medicare and Medicaid are not paying what they should be paying to hospitals and physicians. That means that they’re shifting those costs to those private payers, the employers and their plans, who can’t afford it.
If you have a national plan, that’s just going to cover more of those people, and so it could be a bigger cost-shifting back to us. So, there’s got to be some play. Now, if everybody’s covered, that means the providers are at least getting something; that’ll help us all. But clearly, we as purchasers are already paying taxes to cover that. We’re providing over half the country’s coverage on care, so if they’re going to require us to add more to that, more taxes on us, I think that’s going to be an issue for many employers.
Burda: Allan, where do you come down on that, this third federal health insurance program?
Baumgarten: The health plan industry has been opposed to it. I tend to view this as not necessarily a bad thing for the health plan industry, in much the same way that eight years ago, the pharmaceutical industry was strongly opposed to a Part D benefit because they saw that coming with cost controls and other things. And I always thought that, well, you’re getting access to all these new customers. Even if your profitability on each customer is less, it’s an enormous potential business opportunity. And I think that if you see the public plan and in the context of a wide expansion of access and of coverage, then I think that it’s creating significant business opportunities for the health plan industry.
On top of that, I think it raises a very important issue, which is provider payment—one of the concerns that’s been expressed by the health plan industry is that they wouldn’t be able to compete with a government plan that’s paying Medicare rates. What if these private plans had access to the same kind of payment rates, and would that, you know, put things on the level playing field?
And on top of that, it’s a challenge to the health plan industry whose administrative costs tend to be higher than the government programs. Maybe they need to take a very close look at the administrative costs and see if they can bring that down in order to become more competitive with a public plan.
Gregg: It is interesting again with the TennCare experience. Essentially the TennCare program became a place for people who were considered uninsurable, uninsured, and what we actually saw was that the plan also became a place where employers actually moved employees out of their existing self-funded plans and in some instances out of their commercial insured plans in order to offload that risk to government because the perspective was that somehow somebody else was paying for that. So when you think about slicing this up and fracturing those risk pools even more, you need to be thoughtful about how people can play that.
McLaughlin: In talking about a public option in the health reform plan and the experience of TennCare, I think the word was ‘offloading’ some privately insured people to a public plan. So I’d like to ask Larry, how do you think your coalition members, your business members, would react under such a scheme?
Boress: I think, again, it depends. There’s not just one employer—there’s large employers, there’s small, union-based employers, there’s manufacturing, service industries. They all take a different perspective and that doesn’t count the culture, internally, of the organization. In general, employers offer benefits for two reasons: to recruit, retain talent and to have a productive work force.
The human capital element is critical to compete in a global marketplace, but healthcare cost is what’s preventing employers from being competitive in this country. So if there’s a way to deal with that cost, which is perhaps the one raw material that they can’t get their arms around, they might move it up, but what we’re finding, at least among large employers, is every population is so different demographically and agewise, sexwise, etc.
A company—a high-tech company—that has young people has certain healthcare needs, and they have certain kind of benefits. An old-time manufacturer, average age is 50 and has a lot of other chronic diseases, will have certain things. So, the idea of letting—sending the people over for some kind of base plan that may or may not address the issues of their populations and keep them productive—is not as attractive. We don’t see many employers—at least larger employers—interested in turning their people over to a plan or dropping off.
Clearly if they can remove some cost, a portion of their populations—the retirees, the pre-65, the part-timers—I think you’ll see that. I think as long as employers are given some incentive to keep benefits for certain kind of people, they’ll do so. But there’s no doubt that if you can remove that major cost element—particularly as a smaller or midsize employer—you’re going to look forward to doing so.