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Aon Survey: Employers Express Doubts About Employer Mandate and Government-Sponsored Public Plan

Source: AON

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Posted on 21 Jul 2009

Competition between employer-based health insurance plans and a government-sponsored public plan will not fix the U.S. health care system, according to the majority of employers responding to a Health Care Reform Survey, conducted by Aon Consulting, the global human capital consulting organization of Aon Corporation. What will help fix the system is a focus on wellness programs, evidence-based medicine guidelines, improving quality of care and increasing the ability of patients to be better health care consumers, the survey found.

Aon Consulting surveyed more than 1,100 U.S.-based employers in June 2009 and found that 58 percent of employers oppose a public plan option similar to Medicare to compete with employer-based plans as a way to increase the number of Americans with health insurance. In addition, 56 percent of employers oppose a public plan that would eventually be offered to larger employers through a Health Insurance Exchange. In regard to the scenario of a government-run public plan having lower provider reimbursement levels and richer benefits than competing group plans, 39 percent of employers said they would continue group health coverage but re-evaluate sponsorship after one to two years. In the same scenario, another 10 percent of employers said they would drop sponsorship of group coverage.

"The survey results reflect an opposition to a competing public plan where employers are concerned about an uneven playing field between employer-based plans and a public plan, especially if the public plan is designed based on a Medicare level reimbursement to physicians and hospitals, which is significantly lower than private-sector plans," said John Zern, Aon Consulting's U.S. Health & Benefits Practice director. "As a result, the public plan, if passed and depending on the details, could over time diminish enrollment in group health insurance programs administered by private health carriers."

In addition, the survey found the majority of employers are against the following health care proposals:

* 63 percent of organizations oppose an employer mandate, which would require employers to sponsor group health insurance for their employees or pay into a government fund

* 76 percent of employers said changes in ERISA preemption -- which would limit or prevent multi-state employers from self funding a consistent nationwide health plan -- would be a significant development that could lead to a re-examination or likely termination of health coverage options

* The majority of employers ranked changing/limiting the tax treatment of group health coverage sponsored by employers as the least preferred way to finance health care reform.

"These survey results send a message that employers want the flexibility in their employer-sponsored health benefits to do what's best to recruit and retain talent, and these proposed health care changes may not accomplish this goal," said Tom Lerche, Aon Consulting's Health Care Practice leader.

An employer mandate could result in employers needing to modify benefits to meet a government required minimum benefit level. For those organizations that don't provide group coverage, they may be forced to cut staff to replace the extra costs of complying with the employer mandate, Lerche explained.

"Changes in ERISA preemption would cause substantial problems for the administration of group medical plans for multi-state employers, as it would make health coverage even more costly," Lerche added.

Focus on wellness, consumerism and evidence-based guidelines

Solutions to help fix the U.S. health care system rest in current employer-sponsored coverage, according to survey respondents. In fact, 93 percent of organizations said the most favorable way to increase the number of Americans with health insurance is by continuing the employer-based health care system with a greater focus on wellness, chronic condition management, evidence-based medicine and other innovative approaches.

Employers also believe the most effective ways to lower medical trend is through comprehensive prevention/wellness programs (73 percent of respondents); making consumers more price sensitive and more aware of quality of care data (55 percent); and limits on malpractice suits for physicians who follow evidence-based medicine guidelines (47 percent).

Evidence-based medicine guidelines and tools to encourage consumerism also were cited as the top two initiatives to improve the quality of care based on their highest potential impact.

"Clearly organizations want to improve the current employer-sponsored health care system by building a healthier workforce and a more informed employee to make better health care decisions, and by doing so, reduce claims costs," Lerche said. "While these are all reasonable goals, the challenge resides in implementing the right programs and measuring outcomes, as changing individual behavior is a daunting task."

Zern added: "Regardless of the outcome of national health reform, employers should place a high priority on development of a comprehensive business plan for wellness and prevention. The benefits of a successful wellness program go beyond disease prevention to include reduced absenteeism and 'presenteeism,' lower rates and duration of disabilities, and a more engaged and productive workforce. Most importantly, a comprehensive wellness program should include a process to track and measure outcomes in their workforce to re-evaluate and make changes where necessary."


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