As the largest purchasers of healthcare, employers have much to gain or lose with national healthcare reform. In an effort to provide universal coverage, current reform proposals suggest providing a public alternative to foster competition and leverage health plans.
Protect the employer-based system
Expand 'value-based purchasing' as part of structural healthcare reform
Employer-sponsored healthcare—a system that provides coverage to an estimated 170 million American workers and their beneficiaries—must remain of great significance within the reform discourse and should be leveraged with health plans and providers to improve the quality and cost of care in America.
However, without structural reform that contributes to long-term savings, the business community can ill afford to shoulder the additional costs of universal coverage.
We can all agree that the current path is unsustainable. With America spending nearly twice as much per citizen on healthcare than any other industrialized country, while ranking in the lowest quartile on population health status, the status quo is unacceptable. Unless we change healthcare to focus on delivering value—with focus on quality, health outcomes and cost of care—America's ability to compete in a global economy is at risk.
President Barack Obama remarked in his August address to the joint session of Congress that “it makes more sense to build on what works and fix what doesn't, rather than try to build an entirely new system from scratch.” Underscoring this notion, employers wholly understand and embrace the benefits of pooling their purchasing power and its impact on the healthcare delivery system and America's future competitiveness.
As legislation is debated, it's important to keep in mind the value of an employer-based system. We share the goals for national healthcare reform, including a high-quality delivery system; containment of rising healthcare costs for America's families, employers and governments; and the accessibility of stable, affordable health insurance for all Americans.
According to a May 2009 American Benefits Council survey of corporate benefits executives of leading U.S.-based companies, 89% of respondents say they believe employees would prefer to receive health insurance through employers, despite an availability of similarly priced options through other sources. Furthermore, 82% say they want to maintain the current tax exclusion so that they may continue to provide coverage to their employees and beneficiaries. Clearly, employers and employees value the symbiotic relationship created by the provision of work-place healthcare benefits.
The advantages of employer-sponsored health insurance coverage include:
-- Value-based purchasing: Many employers practice “value-based purchasing,” in which both price and quality of care are weighed in the purchasing decision. Nationwide studies indicate that individuals are woefully unprepared to shop for quality when purchasing coverage.
-- Covered individuals: Employer groups cover almost two-thirds of all Americans under age 65. Groups make enrollment and administration convenient, resulting in many more insured people than if individuals were to go out into the open market themselves. Many undoubtedly do gamble with their health and financial stability by electing not to seek insurance coverage. Subsequently, much of the burden of caring for the uninsured is shifted to those who carry coverage.
-- Shared risk: Groups spread risk within the group. For example, an employee with a chronically ill child pays no more for insurance than an employee with a healthy family. Under individual coverage, each person or family presents a different risk profile. Insurers charge higher premiums or attempt to avoid coverage for families with sick members.
-- Economies of scale: Employer groups exercise a degree of leverage in purchasing health coverage, depending on the size of the group. As a result, groups pay significantly less per capita for coverage of similar benefits than do individuals.
-- Reliable payment: Employer groups typically administer employee health benefits more reliably than individually insured employees. Individuals are more likely to forget to pay, delay payment or sacrifice payment in favor of other priorities.
-- Job-market competition: Competition based on all aspects of compensation, including benefits, historically has been a strong part of the American economy. Employers strive to improve total compensation packages to attract and retain the best qualified and productive work force possible. Likewise, individuals strive to improve their own marketability through education, experience and skill development so they can work for companies with the best compensation and benefits.
-- Focus on prevention and wellness: Employer involvement in the selection and provision of healthcare benefits creates a work environment concerned about employee health and productivity, including benefit design, prevention and wellness.
A crucial next step in the evolution of value-based purchasing is the alignment of purchaser interests and strategies across the public and private sectors. Medicare and Medicaid are large and influential purchasers of healthcare services in every community, but their efforts are often siloed and lead to mixed and conflicting messages in the healthcare marketplace.
These large public programs must have the flexibility to join private purchasers and payers in unified strategies for performance measurement and public reporting, payment reform and health benefit designs. We have an opportunity to establish a healthcare system built on value, with a clear return for every dollar spent through public and private partnerships both at the national level and in communities where care is delivered.
The reform goal of extending affordable coverage to all Americans is a critical national priority, but it will be realized only if real cost containment through value-based purchasing is a core element of responsible reform legislation. As President Obama made clear, reform must also be built on the foundation of a strong, employer-sponsored healthcare system.
This is not an area of the healthcare system that is “broken”; rather, it is where some of the most innovative health status improvement and healthcare cost-containment initiatives are born.
Andrew Webber is president and CEO of the National Business Coalition on Health, Washington.
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