How will public policy impact health benefits?

Public policy has a great deal of influence on health benefits, and a panel of experts looked into what the future could bring during the Employee Benefit Research Institute Winter Policy Forum.

“Our members are experiencing cost increases year over year,” said Garrett Hohimer, vice president of public policy and advocacy with Business Group on Health. “We are continuing to look at all the levers we have to curtail that.”

Hohimer said his organization believes “the government should provide the tools with which we build the house. They shouldn’t dictate what kind of house we build.

“Over the past 10 to 15 years, as we’ve tried to build the house, there have been a lot of changes to the building codes.”

Paying for tax cuts is a concern

Hohimer said he is “relieved” that health care was not targeted for “massive reforms in the recent election.” But he cautioned that Congress is expected to take up the 2017 Tax Cuts and Jobs Act in 2025 “and we’re looking at how we will pay for tax cuts with some of our programs.”

“My big concern here is that employer-based health care coverage is not taxed right now and hasn’t been for 70-plus years. Don’t tax the benefits. Right now, a dollar of health care coverage expenditure is a dollar going out the door to the health care system,” Hohimer said.

He said he understands the theory is that "if you tax it, the willingness of employers to pay more will go down, which will then lead to price reductions on the supply side..”

"However, there is uncertainty in the overall impact because the fundamental economics are based on benefits being tax-free,” Hohimer added. "Once they encroach on the tax exclusion, it’s gone. It will never come back, and we will be dealing with a different universe.”

Some questions

Tracy Watts, Mercer’s senior partner for health care policy, said she is encouraged about the amount of bipartisan support in Washington for bills that would address health care costs. But some questions exist:

• Will the Trump administration put a hold on regulations that health insurers and providers are currently trying to comply with? Will some regulations get reversed?
• What will the new administration do with health-care related cases currently being defended by the Biden administration in the federal courts?
• Will we see a wave of executive orders from President-elect Trump that will impact health care?

The top thing Mercer is focused on is the impact of extending the individual tax cuts in the TCJA and how those will be paid for, Watts said.

“We will make the case why the employer exclusion is so important,” she said.

Watts noted that Trump favors more transparency and competition in health care. “I think that’s good for us – having competition in the market,” she said.

The incoming Trump administration is focused on disruption, but the industry must make sure health care is not a target of that disruption, said Adam Beck, AHIP vice president of commercial product and employer policy.

“There has been tremendous stability in employer-based coverage for 70 years,” he said. “We want to make sure that the incoming administration recognizes that you have a system that a majority of Americans like, and we need to make that system more affordable. We have a system where employers want to be involved in health care and want to make it work. We want to give employers the freedom and flexibility to innovate, and we want Washington to recognize this is a system that does not need to be entirely disrupted.”

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Susan Rupe is editor in chief, magazine, for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at susan.rupe@innfeedback.com.