Consequences of Heath Care Reform
Originally posted November 2010
Richard Alonso-Zaldivar’s article, Could overhaul undermine employer health coverage?, for The Associated Press published by MSNBC October 24, 2010 defiantly raises the issue of possible unintended (or maybe even intended) consequences of Heath Care Reform. He writes: “The new health care law wasn't supposed to undercut employer plans that have provided most people in the U.S. with coverage for generations. But some employers are weighing the options.”
Frankly, if we had the luxury to “start from scratch” with Heath Care in this country it is certain that all the experts would steer away from a system that is employer based. However, 60 plus years of experience with employers providing these benefits (and now with more than 150 million individuals covered through employer programs), the changes required to start from scratch with a non-employer based system are impossible to contemplate, let alone implement.
But perhaps the companies will make that decision themselves. With the options available through Health Care Reform, employers might simply decide that they are “not in the health care business” (unless of course they are) and may also find that divesting themselves from this responsibility with regard to their employees won’t be more expensive than maintaining the programs.
The question for employers who are keen on keeping their best talent is more likely “Do these programs contribute to talent retention?” versus “What are the economics?” Much like the time when employers were contemplating replacing traditional defined benefits plans with employee-paid defined contribution programs, nobody wants to go first. But once there is a ripple of change coursing through the business world regarding Health Care, we expect to see that ripple become a big wave, if not a tsunami.
Every employer is looking at this, trying to understand the implications to cost, to retention and to their business as a whole. Sure there might be added costs if an employer discards their health care plan: penalties, loss of tax write offs, potential retention issues should other employers keep their programs, etc. But there are positives as well for companies who decide to dispose of their health care plans: not the least of which is that with Heath Care Reform those companies who keep their health insurance programs will find them increasingly complex to operate and administer.
Making the right decision will require significant strategic planning – looking at cost models, employee needs, recruiting issues, and the like. At this stage we don’t see employers doing more than talking tactics. “What do I need to do and when?” is the primary question being asked. We encourage employers to look deeper and map out a strategy that will provide options as regulations are finalized and the businesses clarify their positions. Call us. We can help you think through the challenging issues associate with Heath Care Reform.
One good that has come out of the discussion, debate and passage of the Heath Care Reform bill is an increase in awareness by employees of the costs and complexity of health insurance. Becoming educated consumers of health care will help individuals to make better choices once choice becomes an option.