Health Care's Changing Political Landscape Poses Challenges, Creates Opportunities for Self-Insured Employers

October 28, 2016

The past two weeks have been remarkable for the politics of health care.  Since passage of the Affordable Care Act in 2010, the lines have been static in the ongoing debate over whether the Affordable Care Act provides sustainable reform or is fundamentally flawed. Suddenly, those lines have begun to waver.  
  • On the Republican side, their newly-released health care plan would retain some of the ACA’s more popular elements, not simply repeal all aspects of the ACA.  
  • On the Democratic side, the Act is no longer being talked about as resolving all health care issues for all time.  Rather, in a major address on the Act’s progress President Obama said that his signature law was "a first step" and that it was now up to Congress to take the next.  Comparing Obamacare to a "starter home," he discussed "how we fix it," saying later in an interview that it’s "got real problems."  Former President Bill Clinton was less charitable, saying it's "the craziest system in the world" while later tossing out that it’s done "a world of good."  Most noteworthy was presidential candidate Hillary Clinton’s piece in The New England Journal of Medicine saying "we have real challenges ahead” and that the Act needs major legislative changes to "combat the rising overall costs of health care that workers and older Americans see reflected in their premiums, particularly ever-increasing prescription drug costs."
There are a number of factors making these lines waver, a significant one being insurers abandoning state exchange markets and premiums from the remaining insurers spiking in the 30 to 60 percent range.  Another bellwether is the Co-ops created by the ACA.  Of the 23 state nonprofit plans initially created, only six survive, and all are changing their business models.  This means that regardless of who is sitting in the Oval Office next year, the economics of health care will force the next iteration of the Act.  And this poses special challenges for self-insured employers.  Looking at hundreds of news articles and thought pieces about health care written over the past two months, they demonstrate that the principal issue in the debate will be how to make the health care system in its present form more affordable.  There is hardly any discussion of whether a system which most everyone agrees has a waste factor of 30 percent could be made more efficient.  That means the debate in Congress will focus on:
  • A public option;
  • Increased subsidies;
  • Forcing a greater number of younger and healthier individuals to purchase care; and 
  • Eroding the deductibility of health care contributions while creating new taxes in order to raise money for subsidies paid to a variety of constituencies.  
Policymakers and the media will focus on the uninsured and difficult to insure.  However, self-insured employers will need to demand recognition that not only are 177 million Americans receiving care through their employment relationship, but that these beneficiaries don’t want it disrupted and policymakers could easily harm their benefits in a misguided search for funds to increase the affordability of ACA premiums.  In addition, if dealing with the inefficiency of the system is beyond the ability of the political class, then the responsibility for creating true transformation remains squarely in the lap of the purchasing community.  A first step for us, based on all our surveys of and discussions with our membership, is the strong desire to deal with the ever-increasing opacity of the health care marketplace.  Employers who want to fulfill their fiduciary obligations under ERISA by getting a true picture of what really works find having to paying an invoice without being able to evaluate fully the underlying financial transactions to be highly problematic.