How employers want benefit offerings to evolve after the election
As a student of political science, the 2016 election has been like being a meteorologist tracking a hurricane. There has been no shortage of debates, controversies, tests of democracy and Constitutional crises that are both exciting and exhausting. As a citizen, it’s mostly just been exhausting.
As a benefits professional, it’s been surprisingly void of substance around healthcare policy and the Affordable Care Act. Whereas both the 2010 mid-term and 2012 presidential elections were largely seen as mandates on Obamacare, in 2016 it’s been a bit player in a far more contentious — and, many say, issueless — campaign cycle. Through three debates, there were precious few questions of substance asked about the ACA, and the answers left much to still be discussed.
What are we to make of this relatively small amount of debate on the most significant social legislation of the past half-century? And what about the rest of the wide world of healthcare reform? What is concerning us as benefits professionals, and as citizens?
The International Foundation of Employee Benefit Plans has released findings from its 2016 Election: Employee Benefit Issues survey, and it’s clear that HR and benefits professionals are concerned about where benefits offerings are heading after the presidential election. Changes to the current system are inevitable no matter which candidate wins. Based on the top healthcare issues noted in the survey, there are a few trends are bound to cause a stir — and now’s the time for benefit advisers and employers to study up on the direction their benefits repertoire might take.
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The survey found:
- Most employers support more healthcare provider price transparency (96%)
- Tax-favored status of employer-provided health coverage for employers (87%)
Small business health plans that allow small businesses and other groups to join together to offer benefits to their workers/members (85%)
- Increased access to mental healthcare (84%)
- Tax-favored status of employer-provided health coverage for workers (82%)
Some predicted the ACA would be negative for businesses and employees, with employers dropping coverage or limiting employee hours. But the impact was more sideways — more patient protection and “you get to keep your current plan” rhetoric. Now, more changes are on the horizon.
With 85% of those surveyed noting the issue of small business health plans and how these employers will offer benefits after the election, it’s clear that there is more to be addressed. More groups, especially the smallest groups, may reconsider offering insurance all together and instead incentivize their employees to go to public exchanges. However, it’s not just small business health plans that will be affected.
Additionally, employers will continue to shift greater financial responsibility to employees. With increasing healthcare costs and new regulatory pressures of Obamacare, more companies are offering high-deductible health plans and health savings accounts. Fifty-two percent of large employers (1,000 employee+) now offer at least one HDHP, and 41% of employees select an HDHP over a traditional plan when given the option (particularly when it comes to millennials). With these HDHPs comes the need for supplemental protection like critical illness insurance, and the next president will do well to consider the whole benefits package being offered to employees to help them address gaps in coverage and become more whole.
The public exchanges are the one area where we are seeing little decline in public debate, due in large part to record-high increases in premium costs in the individual market. If Hillary Clinton wins, as current polls suggest, we may see a public option for benefits exchange and a further expansion of Medicaid that will make more blue-collar and low wage earners eligible for better coverage through government subsidies. If Trump wins, we may see a shift to more individual coverage through tax preference and increased competition among health plans across state lines.
Regardless of who wins the election, the Affordable Care Act, while still not entirely on steady footing, is not likely to be repealed 100%, because neither party will risk the backlash of kicking people off of coverage at this point. Trump might try, but the GOP will be wary of constituents turning on them if/when their healthcare is yanked. Plus, Republicans have gotten specific in recent months about how to “repeal” while keeping some of the more popular aspects of Obamacare, thereby putting their own mark on healthcare reform without as much political risk.
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Now let’s drill down into some of the key results from the IFEBP survey:
More healthcare provider price transparency (96%)
As more employees and individuals adopt HDHPs, the pressure on providers (and insurers) to be more transparent about their pricing will increase. It’s nearly impossible to achieve the goals of healthcare consumerism without price transparency. And it’s not just providers — big pharma has become the latest broad-stroke villain of the system, with detractors chiming in from both left and right of the political spectrum. The opaque business practices and sometimes bald profiteering, combined with a need to provide more and better tools for Americans to be good healthcare consumers, will be top-of-mind for the next president. Trump supports the import of cheaper drug options, while Clinton would likely go straight at big pharma. Every time she talks about health policy, pharma stocks seem to go down, so that may be an indication of how hard she might look to push for change — and she may find willing participants in Congress if more questionable pricing practices emerge.
Tax-favored status of employer-provided health coverage for employers (87%)
This component of health insurance is one that’s a bit more wonky but surprisingly impactful to the U.S., employer-based system of health coverage. The Trump campaign has alluded to providing a tax benefit to people purchasing an individual market plan that is similar to the current tax preference for employer-based insurance. It would appear that a Trump administration would limit eligibility for this tax benefit to people who have no offer of coverage from an employer, but it is certainly a slippery slope, and it could encourage employers to drop their group coverage and allow their employees to purchase an individual market plan instead. Clinton and Democrats wouldn’t change the current premium subsidy structure that is now in place in the individual market, but a Clinton administration could be in favor of limiting the tax preference for employers even though the Clinton campaign has called for repeal of the Cadillac tax. In fact, limiting the employer tax preference is a rare point of bipartisan support among mainstream Democrats and Republicans, so don’t be surprised if a Clinton administration works with a Paul Ryan leadership to address that preference through new tax policy or other alternative means.
Small business health plans (a.k.a. association health plans) that allow small businesses and other groups to join together to offer benefits to their workers/members (85%)
One of the more glaring but not-talked-about failures of Obamacare is the inability to get the SHOP (Small-business Health Options Program) exchanges running to their projected potential. These counterparts to the individual public exchanges were supposed to provide real competition among health carriers through a marketplace geared toward small businesses. On numerous occasions, HHS has acknowledged that the business and technical hurdles to making these exchanges work (existing carrier systems and practices like minimum coverage requirements being major roadblocks) were and are greater than expected. As a result, we haven’t seen much activity from them except in places like Washington, D.C., where small businesses are required to use the SHOP exchanges if they want to cover their employees. A new presidential administration may look at these shortcomings and decide to throw more support behind association-based health plans to promote small-business-based health coverage. Or, they may look at the D.C. model and decide that mandated participation is the way to go — although there’d have to be a pretty clean sweep of the Democratic party in the White House and Congress to take that kind of bold step.
Increased access to mental healthcare (84%)
A welcome trend is the “normalization" of mental healthcare as a critical component of healthcare plans and policies. First Lady Michelle Obama recently said, “We need to teach our kids that mental illnesses are just like physical illnesses and deserve the same kind of care and compassion.” The Clinton campaign has nearly 5,000 words on her campaign website devoted to mental illness policy, and you can be fairly positive that it will be a meaningful component of her plans to “fix” Obamacare and healthcare overall.
Tax-favored status of employer-provided health coverage for workers (82%)
As noted above, tax-favored status for workers can be seen as incompatible with tax-favored status for employers in that one encourages employer-based coverage and the other encourages individual-based coverage, and both in combination may have an adverse impact on the employer-based health system. It will be interesting to see which direction a new administration goes on this topic and what kind of support or opposition they will face from a very-likely divided Congress.
Looking for patterns in these survey results can be both easy and confusing — and sometimes both at the same time. For example, there is clear, widespread support for employer-based coverage. There is also a great deal of support for some of the key tenets of Obamacare: Increased access to mental healthcare (84%), elimination of preexisting condition exclusions (73%), government-provided subsidies for low-individuals (69%), coverage of adult dependents to age 26 (63%) and buying coverage through exchanges/marketplaces (62%).
Yet, when asked the simple question of whether the ACA should be repealed, 41.2% say yes, while 45.5% say no. So, even with widespread support for the individual policies that comprise it, there is still a great divide on attitudes toward the law itself. In meteorological terms, that’s an invest on its way to becoming a tropical storm and, if the conditions are optimal, may become another political hurricane before we know it. Stay tuned …
P.S. Nobody likes the Cadillac tax!