Large employers call for health, benefits overhaul

A coalition of large employers yesterday unveiled a healthcare and fringe benefits reform proposal aimed at reeling in costs borne by the private sector and providing workers with benefits they can maintain if they change jobs.

The report, issued by the ERISA Industry Committee (ERIC), is the product of a task force composed of representatives from firms such as Tyco International, ITT Industries, General Mills and Deseret Mutual.

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The proposal seeks to address the single biggest problem large employers have with the current healthcare and retirement system: the long-term costs of providing benefits. Large employers have grown increasingly restive about healthcare reform in particular as their health insurance costs escalate and constitute a rising share of their expenses.

The large employers propose to limit their role in providing health, retirement and other fringe benefits by creating what they term “benefit administrators,” or independent companies with the sole purpose of administering health plans and other benefits.

The administrators would offer a standardized set of core benefits to employees, who would be able to keep their plans throughout their lifetimes, not just while employed at a specific company.

Under this structure, employers would only be responsible for the cost of their share of insurance premiums and pension contributions, not administrative costs.

The more than 100 firms that make up ERIC’s members offer health and retirement benefits to their current and retired employees under the auspices of the Employment and Retirement Security Act (ERISA), a federal law that permits companies to offer the same benefits in multiple states by superseding state insurance and pension laws and that applies to firms that self-insure, or bear the full financial risk of offering insurance to employees. ERIC estimates its members provide health benefits to 10 percent of the U.S. population.

“It would be better if [employers] could get back to their core businesses and leave it to the professionals,” ERIC Vice President for Health Policy Edwina Rogers said.

The plan would not require that employers make financial contributions to these benefits — it would, however, mandate that individuals obtain health insurance.

ERIC recommends that the government provide subsidies to ease the burden on low-income individuals, but the lack of a requirement that employers participate in the system stands in marked contrast to healthcare reform proposals from other corners, including the Massachusetts universal healthcare plan, which includes both an individual mandate to purchase insurances and a mandate that employers either pay a share of their workers’ premiums or contribute to a statewide funding pool.

Rogers noted that large employers already offer health and retirement plans to their workers under the current, voluntary system. Their plan, she said, “would be voluntary, just like 401(k)s and healthcare plans are now.”
“The employer would still be very involved” in selecting the benefit administrator and providing information to workers about the benefits available, Rogers said.

ERIC’s proposal contains elements common to many of the healthcare reform plans that have emerged in recent years, such as expanding the use of information technology in healthcare, providing information to patients about the cost and quality of the medical services provided by individual doctors and facilities and tying providers’ payment rates to the quality of the care they give.

Rogers said she has been shopping drafts of the plan around Capitol Hill since late last year but maintained that most of the elements of the proposal could be put in place without federal action. “This could be implemented in the private sector,” she said, noting the federal action on components such as the low-income subsidies would enhance what employers might do on their own.