SAVING EMPLOYER HEALTH PLANS
February 16, 2007
Skeptics of President Bush's health care plan say the approach might weaken the employer-based system and drive up costs for those who need care the most, says Nina Owcharenko, senior policy analyst at the Heritage Foundation.
It's a reasonable concern, but it's not necessarily so. Indeed, the president's proposal may stabilize and even revitalize the employer-based system, says Owcharenko:
- Employers don't provide health coverage because they're selfless and generous; they're competing in the labor market with overall compensation packages, not wages alone -- so employers who sponsor health plans enjoy a competitive advantage they're loath to relinquish.
- Employers are natural "pooling agents" for keeping costs down; the larger the employer (and thus the pool of employees), the more leverage in securing better deals for workers; insurers also require many employers to meet participation rates, so employers have a strong incentive to make plans attractive to younger workers.
- Workers' familiarity and comfort level with employer-sponsored coverage are strong bonds; purchasing health insurance can be complicated and some employees prefer having an experienced employer take on most of the headaches and paperwork, just as with retirement savings.
Congress also can add protections to the Bush plan, says Owcharenko. It could:
- Require workers with access to employer-based coverage to use the deduction there, rather than for private insurance -- this isn't ideal, but it would protect participation in employer-sponsored coverage while giving equal tax benefits to those without it.
- Create a "blended" marketplace, with an aim to preserve the convenience and other pluses of employer-sponsored coverage while stressing choice and "personal" policies that workers carry from job to job.
- Make the insurance market more stable and affordable; state initiatives, such as implementing high-risk pools and risk-adjustment policies can help those whose medical conditions make them hard to insure, as well as build stability in coverage.
Source: Nina Owcharenko, "Saving employer health plans," Washington Times, February 16, 2007.
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