The conservative agenda: pushing business out of health care - business and health insurance benefits

Business & Health, June, 1995 by Harris Meyer

The big question is how much the MSA concept will be watered down by the time final legislation is written. Long-time MSA champion John Goodman of the National Center for Policy Analysis has already put out a compromise version sheltering only after-tax dollars. The change has drawn heavy flak from MSA partisans, but it could appease deficit hawks who fear that a new tax shelter for health care would cost the government billions of dollars in lost revenue, with no assurance that it would broaden coverage or control costs. Besides, any savings would accrue to the private sector, when Congress wants to whack dollars out of government spending.

In the end, business groups say they might hold their noses and accept a mild version of MSAs, perhaps something like Goodman's proposal. One of their major caveats: People with MSAs can't be allowed to switch back quickly to standard coverage when they get sick, which would shift costs unfairly to those who stayed in the insurance pool.

Sean Sullivan, president of the National Business Coalition on Health, predicts that GOP leaders will be torn between their philosophical devotion to individual freedom and their commitment to the free market, in which employer large-group purchasing has actually brought down costs. Senate Republicans, however, will be less inclined than their House counterparts to go with their ideological loyalties. The fate of MSAs could come down to a "wrestling match" in the mind of Speaker Gingrich, Sullivan says.

THE LONGER TERM

Minds in the business community, however, seem to be made up. Large companies have put a lot of effort into holding providers and plans accountable for quality and cost, and they don't think individuals set loose in the market could do the same. "We think the employment-based system has proven itself in bringing costs under control and driving toward better quality," says Rick Smith, health policy director for the Association of Private Pension and Welfare Plans. "With an individual-based system, the big question is whether you could have fair-market competition."

On the other hand, there is some business support for increasing individual responsibility and choice in the context of employee-sponsored plans.

By 1997, the Business Health Care Action Group in Minneapolis plans to have its 23 self-insured corporate members give vouchers to their 100,000 employees and let them do their own shopping. An array of competing provider networks would offer the same benefit package, publish their patient satisfaction and quality measures, and base their premiums on risk-adjusted targets negotiated with the employers. Company contributions would be capped at the price of the cheapest network.

Many employers want to shift to this type of defined contribution, as they've done with pensions, rather than guarantee a benefit package, Sullivan says. He and other health benefits experts insist, however, that individual purchasing will only succeed in a highly structured, managed care market organized by employers. Individuals need much better cost and quality information than is currently available before they can shop effectively. They also need strong protection against discrimination and differential pricing based on their age, health status, and occupation, experts say. Such bias is rampant in the open market. But tough rules against risk selection face an uphill fight in Congress, and would be difficult to enforce if violations had to be dealt with one individual at a time rather than through group purchasers.