HR Policy has been surveying its members on health care issues for more than two decades. For the most part, the responses are predictable, but not so for the Association's 2017 CHRO Survey. As described in my paper, "Changing Attitudes Among Large Employers Towards Health Care Delivery: A 2017 Snapshot" published by the American Health Policy Institute, the survey brings into focus the extent to which CHROs are now willing to look at approaches to providing health care once thought heretical.
This changed thinking could be driven by a variety of factors—the inexorable increase in health care costs and complexity, a political process incapable of reasoned discussion regarding how to address it, and a continuing frustration with conventional systems of health care. Whatever reason, change is afoot.
Example number one. For decades, large employers have operated on a self-insured basis and eschewed the individual market, not only because of its negative tax implications, but because of a belief the market can be beaten with company-specific plan designs and focused purchasing power. In addition, large employers operate on a multi-state basis, and they prefer the efficiency of uniform benefit platforms permitted by ERISA, a federal law exempting them from state by state regulation. The conclusion can be drawn then, that HR Policy members, most of whom are self-insured, would have little interest in the individual marketplace.
Not correct. The 2017 survey conducted in March found 85 percent want the tax treatment of health care equalized such that there is no differentiation between the individual and group markets. Ninety-one percent want policymakers to encourage a competitive market for individual health coverage. Further, if they could do so without penalty, 53 percent said they would like to voucher employees into the ACA exchange markets where low income people could receive subsidized care. Finally, and most importantly, 48 percent said that if there were no difference between the cost of providing care through the company’s self-insured plan and vouchering employees into the individual market, they would consider providing health care using the individual market.
For years, we have been told by the membership about the importance of flexibility, control over plan design, and the need to ensure that the company's program fits its unique culture. We have been told that allowing health care to be turned into a commodity would be a step backwards. Yet in the individual market, there is little control and scant ability to tailor beyond picking from menus of off-the-shelf products. Why this dichotomy? Do CHROs feel that health care has changed so much over the past several years that no matter what they do, their ability to influence the marketplace is minimal? That they would be better off in a world in which companies provide subsidies, employees chose the benefit, and carriers competed for the business directly with employees? Is it that companies no longer want to manage a complex health care delivery infrastructure? It's difficult to tell, but this survey begs several follow up questions.
Example number two. Conventional company health plans, particularly among larger employers, tend to be one-offs in which a plan is tailored to the unique nature of the company’s culture. Carriers work with providers, PBMs and others to produce an administrative structure to operationalize this customized platform. It is axiomatic that customization of something that could be utilized in a standardized fashion will come at a higher price. However, it has been our understanding that companies see customization as giving them the ability to, among other things, target specific issues in the company's population. Health care providers counter that specific needs aren't necessarily confined to single company; rather, they span the population. Care coordination, they argue, should be community based, not company based. By aggregating needs across companies in a standardized way, they say, more efficient and effective disease management programs could be put into place.
In view of all this, the survey asked if there were a system of simplified plan designs potentially covering millions of individuals with standardized benefit designs and limited ability to customize, would employers be interested in utilizing this option? Only 13 percent said no; 64 percent said yes. Carriers may wish to take note.
Now, in reading through the various questions in the survey, it's clear that about 30 percent of companies are unwilling to make any radical change in their traditional self-insured program. But that 30 percent looks to be the ceiling which means there are large numbers of employers ready to move in non-traditional directions.
The 2017 survey did have several predictable responses; namely, a desire for an affordable system of care to cover the uninsured, a concern with the federal government eroding the ability of multi-state employers to operate nationally with uniform benefit plans, deepening frustration over the lack of transparency of health care cost and quality data, and opposition to the desire by policymakers and think tanks to eliminate the ability of employers to deduct the expense of providing employees and their dependents with health care.
But with ACA reform now in the Senate with no clear path to changing it to create a more stable system of care, policymakers might want to look at the entire field of health care beneficiaries, not just those in the ACA exchanges. For example, Congress is wrestling with the fact that those in the ACA risk pools are older and sicker than the population generally which drives up premiums. At the same time, there is strong resistance by much of the public to being forced to purchase insurance, particularly when it is expensive. How will those competing interests be reconciled? Employers, on the other hand, have much healthier risk pools and are more adept at getting people covered. These employers are now expressing interest in exploring the possibility of shifting to the individual market and simplified benefit plans. Perhaps there is a win-win solution in all of this.