Healthcare Position

NOVEMBER 18, 2009

Conner Strong's Position on National Healthcare Reform

As part of our brokerage and consultancy business, we represent hundreds of employers that offer benefits to their employees. For many of them, a comprehensive benefits package is integral to their business and helps define their value proposition in the recruitment and retention of their most valued asset: their employees. As a result, Conner Strong continues to monitor the ongoing debate in Washington over healthcare reform.

Reforming healthcare in the US is as complex and controversial as any public policy matter facing the nation in recent history. Unlike many issues that dominate the national stage, healthcare touches virtually every American. Plus, at 17 percent of the GDP, its impact on our economy and our way of life cannot be underscored. Conner Strong's views on this debate are non-partisan and are based on how potential reform may impact our clients and their businesses. Over the next several weeks and months, the landscape of this debate will continue to shift. Based on the facts as we know them today, here are our thoughts, concerns and positions on the bills currently before the US House and Senate:

Cost Challenges

• Estimates from the non-partisan Congressional Budget Office (CBO) suggest the cost of overhauling healthcare could be between $900 billion and $1 trillion over the next 10 years. On top of that, the chief actuary for the Center for Medicare and Medicaid (CMS) suggests that the bill passed by the House of Representatives would actually raise healthcare costs by an estimated $289 billion over that same period. This is in addition to the $1 trillion price tag. There has yet to be a clear outline as to how these staggering costs will be absorbed. More needs to be done to outline how the bill will be paid and by whom;
  
• The various bills lack any meaningful ways to control and stabilize healthcare costs. Current legislation deals more with expanding coverage and lacks any meaningful reform to rein in skyrocketing costs. While the issue of covering the uninsured is important and we support measures to ensure all Americans have access to health insurance, the current bills do not address dealing with the drivers of cost. They also fail to outline how they will contend with this issue on a long-term basis. Absent effective ways to deal with rising costs year after year, the current bills will simply grow the cost of healthcare which will likely represent higher costs for businesses and workers;

Quality Care

• There has been little focus on getting workers and all Americans to actively engage in wellness and improve the nation's overall health status. The cost affiliated with chronic but treatable conditions is staggering and driving up the national healthcare-spend every day. Meaningful efforts must be put in place to address these staggering costs that could be better managed through increased promotion and by embracing a culture of health and wellness. Incentives need to be enacted to drive up preventive medicine, wellness and related services as well;
  
• There is no support or incentive for evidence-based medical care or a way to make certain that we don't pay for treatments that are ineffective. Systematic approaches to deal with the cost of bad medical care, duplication and waste in the system must be addressed. Moreover, the current measures being discussed lack developing rewards for superior outcomes and treatments. Any meaningful reform must address these issues;

Policy Issues

• The current proposals do nothing to deal with medical liability issues and costly defensive medical practices that exist at all levels of healthcare in our system. Approaches to deal with the medical liability issue must be dealt with if we are to tackle both cost and quality in a legitimate way;
  
• None of the bills being debated create a strong independent commission that can help Congress make the necessary decisions to eliminate wasteful and harmful treatments, address spending issues and deal with the ongoing cost challenges affiliated with Medicare and Medicaid. In a highly charged political environment, Congress will likely remain polarized and unable to make the tough decisions necessary to manage healthcare beyond the current debate;
  
• Eliminating pre-existing conditions should be enacted no matter the final outcome. Yet this can only be done if there are real requirements for all Americans to have insurance. If such requirements are not in place, the healthy will likely pay the minimal penalties proposed for not carrying coverage and when they get sick, they'll have access to buy into coverage without limits. This will create serious adverse selection issues that will only create greater cost challenges;
  
• The House bill appears to undermine the strength of the Employee Retirement Income Security Act (ERISA). ERISA is the federal law that provides a standard legal and administrative framework for employers to uniformly and consistently manage benefit plans. Challenges and changes to ERISA pose serious threats to the US employer-based system that should be avoided;
  
• The current bill in the House contains a particularly problematic requirement that any employer still offering retiree medical coverage would have to continue doing so indefinitely. This mandate will likely pose challenging limitations on American businesses and punish those that have maintained some form of retirement benefits;

The Public Option

• Many serious questions remain over the public or government option and how it may impact the private markets. While intended for individuals and small employers, the limited penalties now contemplated may lead to larger-than-planned enrollment in a government option that could ultimately cause greater cost over-runs and in turn deteriorate the balance of a private market system;
  
• Regarding a possible public or government option, an employer who provides comprehensive benefits to employees could still be subject to an 8 percent payroll tax if their employees decline the employer provided coverage if it costs more 12 percent of the employee's income. Plus, the House bill includes provisions that would allow the government to determine what coverages count as being ‘credible,' creating the capacity for the government to ultimately determine what all employers must provide by way of insurance.

Conclusion

We believe any reform must preserve the employer-based system in a strong and stable manner. In our view, the employer-based system has real value for American business that is often overlooked. The employer-based model ensures that employers have "skin in the game" and influence over getting employees healthy and keeping them at work: issues that are fundamental to maintaining productivity and ultimately profitability. When employers lose the ability to remain as active stake-holders in healthcare and give up influencing their workforce to maintain healthy lifestyles and come to work, they ultimately sacrifice the ability to control their own destiny.

As the debate continues to unfold, Conner Strong will continue to advocate for reforms that protect our clients and their businesses. We encourage all stakeholders in this debate to be actively engaged and weigh in by contacting their federal representatives and various trade organizations. Fixing the things that are wrong in the American healthcare system can and should happen, but only in a measured and balanced way that protects what is unique about our system and preserves an employer's ability to remain a stake-holder in the process.