Jackson Hole plan gaining support - Jackson Hole, Wyoming health care reform plan - includes related article - Reforming Health Care: State and Local Actions

Business & Health, Annual, 1993 by Kenneth M. Coughlin

"We agree with many of the managed competition notions in the Jackson Hole proposal," says Walter Zelman, Garamendi's special deputy for health insurance. "We have built in the notion that consumers have the choice not only of which plan to choose but of how much they want to pay. But we remain unconvinced that leaving the employer in the equation is gaining anything for anyone. With the exception of some of the activities on the part of very large employers, there is little or no evidence that employers are driving good bargains, creating cost containment, maximizing choice for would compete on the basis of price and quality.

The commission is undecided about whether employers should remain the chief health care sponsors or whether a new sponsoring agency should be established to buy health coverage for all residents. In either case, however, health care costs would be contained in ways similar to the Jackson Hole model. The Washington commission, however, is unwilling to leave cost containment entirely to market forces. Instead, a state board would set a ceiling on how much certified health plans could charge for delivering the uniform benefits package.

The ERISA roadblock

Doreen Garcia, the commission's research director, says that if Washington State were to take health care sponsorship out of the hands of employers, it would solve one dilemma perplexing many states: how to reform their health care systems without violating the federal Employee Retirement Income Security Act (ERISA). ERISA is an obstacle to the implementation of many reform plans, including Jackson Hole.

Enacted in 1974, ERISA shields businesses that self-insure their health coverage from complying with state benefit mandates. Without the law, multistate employers would face administrative chaos trying to conform to a multitude of differing state benefit mandates. However, ERISA also prevents states from compelling all employers to purchase coverage from health care plans offering a uniform package of benefits.

One possible way around the problem is for states such as Washington to eliminate employers from health care purchasing. Because employers would simply be paying into a statewide fund that purchased health care, that would mean, presumably, that the states would not be mandating benefits.

The West Virginia Health Care Planning Commission is also considering a Jackson Hole-style health reform plan that would eliminate employers from health care buying. Sally Richardson, director of West Virginia's Public Employees Insurance Agency, says, "It seemed to make some sense for West Virginia as a way to reduce administration and begin to get cost containment without taking the free market away from the provider community."

A commission task force developed a proposal for a public and private governance system. It would establish criteria for qualifying insurers that offered the same comprehensive package of benefits. The system would be funded not with employer premiums but with a broad-based tax on both employers and individuals. The commission also considered using the tax system to give providers cost-containing incentives, as in the classic Jackson Hole model.