IN THIS ISSUE:
? U.S. DOL Looking at Defined Contribution
? New Galen Paper on Association Health Plans
? NFIB Chief Decries Big Bad Wolves Opposing AHPs
? Judd Gregg to Move Uninsured Package in 2004
? HSAs Get Same Old MSA Opposition ? Yawn
? Rep. Ryan ? HSAs Most Instrumental Part of Health Reform
? Auto Makers Start Contract Negotiations
? ?No Way Auto Makers Can Afford These Benefits?
U.S. DOL Looking at Defined Contribution
This week I am testifying before the ERISA Advisory Council of the U.S. Department of Labor. They are looking into ?defined contribution? health plans and self-insurance under ERISA. I?m making my ?New Tools? presentation, and adding some comments about the various models of new consumer driven plans. My testimony distinguishes between ?defined contribution? and ?consumer driven? models, with the first based on the question of who chooses and owns the coverage, while the second model tries to reduce the amount of third-party payment in favor of direct pay for services. Both are important in the New Consumerism, in my opinion.
SOURCE: New Tools: http://www.galen.org/news/NewTools.pdf
New Galen Paper on Association Health Plans
Galen has also released a new paper I wrote on Association Health Plans. It walks through the arguments on both sides, agrees with some, but disagrees with others, and suggests ways that both sides could unite behind a bill. These include:
? Allowing an association to be exempt from state regulation, provided it meets all the standards in the law, whether it is self-insured or buys its coverage from an insurance company.
? Extending the exemption to all state insurance regulations, not just mandated benefits. Particularly important here are the rating restrictions most states have in place that have far more impact on costs than mandates do.
? Making absolutely sure that the solvency provisions are adequate.
If these provisions were included, virtually everybody would want to join an association to get their coverage, and insurers would be able to market their policies to these associations wherever they are located. It would be a boon to competition in the small group and individual insurance markets.
NFIB Chief Decries Big Bad Wolves Opposing AHPs
NFIB president Jack Faris argues that AHPs could save small employers up to 30% of their premiums and extend coverage to 8 million currently uninsured. But, he says, vested interests have turned into ?Big Bad Wolves (that) howl opposition to any idea that might reduce their bulging revenues.? He cites an Associated Press story that foes of AHPs were discovered to be offering a vacation sweepstakes to anyone who sent a ?free fax? to Congress opposing AHP legislation. He describes the AHP opponents as ?a well-camouflaged pack of big insurance companies, surrounded by hungry labor unions and a passel of special-interest groups licking their chops to gobble up even more of the dollars that small businesses are being forced to pay.? This is the kind of fierce rhetoric that surrounds the AHP legislation today, making it doubly hard to find a compromise that would work for both sides.
Judd Gregg to Move Uninsured Package in 2004
?National Journal?s? Marilyn Werber Serafini reports that Senator Judd Gregg (R-NH), the chairman of the Health, Education, Labor, and Pensions Committee ?is making plans for committee consideration of legislation to reduce the ranks of the uninsured? this fall and early winter. He doesn?t think it is possible to ?get to it this year,? so he wants to ?put on the table a series of ideas? for action in 2004. The article says, ?he has not yet decided whether he will promote the formation of association health plans in the committee?s legislation.?
SOURCE: National Journal?s CongressDaily, July 17, 2003. I don?t think there is any way to access this on-line.
HSAs Get Same Old MSA Opposition ? Yawn
As long as we?re talking about Congress, there are a couple of articles on the Health Savings Account legislation the House included in the Medicare drug bill. One is by Joel Finkelstein in ?AMNews.? The article briefly describes the legislation, then gets right into what the opponents think of it. Bob Greenstein of the left-leaning Center for Budget and Policy Priorities thinks ?the majority of U.S. employers would move to higher-deductible, employer-based plans to use the health savings accounts,? according to the article. ?It will probably make health care coverage worse, not better,? he says. But NCPA?s Michael Cannon argues that the accounts ?would put consumers in the health-spending driver?s seat.? The article also mentions that, ?AMA policy states that MSAs offer a health insurance option that relies on market-based strategies versus regulatory approaches to gaps in coverage.?
Rep. Ryan ? HSAs Most Instrumental Part of Health Reform
And writing in ?The Hill,? Justin Gelfand describes the HSA amendment as ?an 11th hour effort to attract conservative support for Medicare reform?.? The amendment passed the House by 237-191, but the article says, ?Some House Republicans fear that HSAs and HSSAs will be blocked because of their high cost? (set at $174 billion over ten years). Senate Democrats have already written to President Bush demanding that the funds ?be used to close the gaps in the Medicare prescription drug benefit.? Even Senate Finance Chairman Chuck Grassley (R-IA) is dubious about it, according to the article. The only supporter quoted in the article is Rep. Paul Ryan (R-WI), who says, ?I believe HSAs are going to spark a consumer revolution in this country, which is desperately needed. HSAs are probably the most instrumental part of healthcare reform. People spend more time shopping for their cars than they do for their healthcare, and it?s because of the third-party system.?
Auto Makers Start Contract Negotiations
Speaking of cars, Tom Walsh writes about upcoming labor negotiations in the auto industry in the “Detroit Free Press.” He likens the American automaker?s situation to the steel and airline industries, where generous labor agreements brought the companies crashing down. He says, ?That was fine back in the day when a worker hired on at the age of 20, worked until 70, and died soon after. Now when a worker starts at age 20, retires at 50 and lives until 90, the math gets ominous.? Mr. Walsh asked UAW president Ron Gettelfinger whether the UAW would consider moving to a defined contribution approach to health and retirement benefits, and was told, ?No, we won?t look at that.? But later he added that the union is responsible and isn?t going to kill itself.
?No Way Auto Makers Can Afford These Benefits?
The “New York Times” had a similar article. But it concluded that the UAW ?may give ground on issues like wage increases, plant closings or work rules. (But) the matter of controlling medical costs would likely remain untouched.? Reporter Danny Hakim says the idea of Medicare taking over prescription drug benefits for retirees might help. Goldman Sachs called the Medicare bills in Congress ?the automaker enrichment act.? ?But even this change would barely scratch the surface of the Big Three?s health cost problems. For GM? such a plan might trim $2 billion from the $57 billion health care liability it projects in coming years.? Princeton?s Uwe Reinhardt describes the Big Three as, ?a social insurance system that sells cars to finance itself.? Industry analyst Maryann Keller, concludes, ?If GM, Ford, and Chrysler can?t find a way to make huge margins on some of their production, like they did with sport utilities in the late 90s, there is absolutely no way they can afford to pay these benefits.?
SOURCE: http://www.nytimes.com/2003/07/15/business/15AUTO.html. There is a fee for accessing the article.
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