Magazine article Workforce Management

Business Group Seeks an End to Employer-Based Health Coverage

Magazine article Workforce Management

Business Group Seeks an End to Employer-Based Health Coverage

Article excerpt

HEALTH CARE OVERHAUL

A business group whose list of corporate donors includes the Coca-Cola Co., IBM and MetLife is calling for an end to employment-based health care, saying such an overhaul of the U.S. health insurance system is necessary because employers are unable to work together to reduce health care costs.

In a report released last month, the Committee for Economic Development wrote that recommendations it made five years ago, among them a proposal to create health care purchasing coalitions, have not worked. One reason is that employers with healthy workers did not want sick employees from other companies to drive up their costs.

"Employers acting alone or even in voluntary consortium cannot achieve the kind of systematic change to fix this problem," the authors note before concluding: "We see no signs of employer action." As a result, the crisis in American health care has only worsened, according to the report.

"The U.S. employer-based health insurance system is failing," the report says, citing a litany of problems: The number of uninsured Americans continues to grow as small businesses stop providing health insurance, and the cost of health care is threatening the competitiveness of American business and will soon bankrupt public budgets.

The report says the current system is inherently inflationary. By paying for most health care expenses, employers insulate spendthrift employees against the cost of medicine. Employers that save money on health care do so by offering one health plan, which insurance companies price based on the size of the company, not on competition with other insurers. Employees, meanwhile, want to have a wide range of doctors. Since creating such networks is administratively complex, the most efficient way to reimburse doctors in such a large network is to pay a fee for each service provided by doctors. This fee-for-service system drives up cost because it is based on quantity, not quality.

The prevalence of chronic disease has also added to health care costs, and band-aids like consumer-directed health care leave sick and poor workers vulnerable, according to the report.

Joe Minarik, research director at the group, says the belief that the current system could not be salvaged led the group to propose a new health care program in which all Americans would be given a credit to purchase insurance among a variety of insurers in their region. …

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