As an Expert Advisory Board member to the R.I. Health Benefits Exchange (now called Healthsource RI), I literally counted the seconds to predict how quickly my well-respected colleague Ted Almon would echo the sentiments of single-payer advocate Howard Dean that “we should divorce employees from employer-sponsored health insurance” (“Does employer-sponsored health coverage make sense,” July 22, 2013). Mr. Almon further states that “employers do not need to be involved in the health care of their employees.”
As a 30-year employee-benefit consultant to more than 1,000 companies, please allow me to elaborate on just a few of the major reasons why most employers are, and will continue to be, involved in the health care of their employees.
First, many employer groups today are looking for more control and accountability, not less, over their health plans and the overall well-being of their employees. With human resources managers keenly aware that a healthy workforce is a more productive workforce, today the majority of all employers now offer some type of Health Reimbursement Arrangement, Health Savings Account or Flexible Spending Account, alongside a comprehensive wellness program that provides measurable data and delivers meaningful results that will continue to strengthen the bond between employer and employee.
Across the country, the evidence is overwhelmingly clear, on the number of popular carrier-supported wellness programs, mobile and online wellness apps, and worksite wellness award initiatives (i.e. PBN’s own Healthiest Employers program) that will continue to enforce a key role between employer and employee.
Additionally, Mr. Almon comments that “most company benefits limit the employee choice of coverage to one or a very few company sponsored plans.”
Contrary to popular belief, most employees I work with actually appreciate the due diligence the decision-makers of a company perform in selecting the appropriate plans and coverages for their valued employees. To some employers, dropping coverage altogether and replacing a tax-deductible contribution with a taxable pay raise may seem appealing, but be careful for what you wish for. How difficult will it be for HR managers to manage 25 different plans for 25 different employees?
With employees not beholden to their employers for their coverage, all efforts to have any oversight on the cost control and quality of that coverage then goes away. Furthermore, at what point does productivity begin to decline because an employer must now address and manage issues on behalf of an employee who chose a completely inappropriate plan for them and their family members? There is a good deal of research that suggests that consumers’ choices may not be rational when the number of alternatives is large, the alternatives are complex, and the communication toward that information is limited.
For those small-employer groups that do not have the appropriate broker guidance and/or HR personnel, a smarter solution, rather than dropping coverage altogether, will be to purchase coverage as a group under the “defined contribution” approach. An employer will provide for a fixed-dollar, tax-deductible contribution toward the purchase of coverage, and then allow an employee to utilize those tax-free dollars to select the coverage most appropriate for their own individual or family needs through our state’s health benefits exchange (HealthSource RI).
Fortunately HealthSource will allow for one composite group invoice for all selected plans to make the “defined contribution” approach easier to manage. Whether the defined-contribution approach of purchasing employer-sponsored coverage becomes the popular choice for some employers, may become as unpopular as when the majority of companies switched from defined-benefit retirement plans to defined-contribution retirement plans.