Improve Employer-Sponsored Health Insurance To Preserve It, AHIP Members Told

The employer-sponsored insurance system “has been popular and resilient” and is here to stay, a policy think tank expert told attendees at America’s Health Insurance Plans’ virtual National Health Policy Conference on Thursday.

James Capretta, resident fellow and Milton Friedman Chair at the American Enterprise Institute, told AHIP members “the public appreciates good, high-quality employer coverage and they are reluctant to give it up.”

“It’s here to stay but we need to keep making it better for the public.”

Capretta’s statements came on the heels of an AHIP survey that revealed more than two-thirds of Americans who receive their health insurance through the workplace are satisfied with their coverage. Three-quarters of those surveyed said health insurance played a role in their decision to accept their current job, while 78% said it affects their decision to stay at their current job.

Employer-sponsored insurance is foundational to the coverage system in the U.S., Capretta said. “It’s grown up in sort of an idiosyncratic way. It wasn’t planned to be that way, but it has become a bedrock of how working-age Americans and their families get coverage.”

The employer-based health insurance system needs to be preserved and improved over time, he added, “but we need to recognize that it’s under pressure and has been for a number of years. How do we address that pressure?”

Capretta noted that employer-sponsored health insurance premiums are increasing faster than wage growth. “In a certain way, it’s better to look at health insurance benefits as compensation to workers. As certain firms have to compete for labor, they are competing by offering health benefits. As they offer greater health benefits, that puts more pressure on what they can offer for cash wages.”

He noted the federal tax benefit conferred on employer-based health insurance and recommended businesses be permitted to move to a firm-level tax credit with firm expectations on what they do with that tax credit. Companies can give it to the workers to pay for insurance, and in return, employers would reduce the amount they would spend on that coverage.

“You could say to the employers taking this tax credit, 'here are some conditions: Let’s use this to move to a defined contribution system so that workers have a strong incentive to go to lower-cost, higher-value options such as HMOs.' This would put downward pressure on all coverage – not just coverage offered by individual firms.”

The employer-supported insurance system has been marked by premium increases over the years, said Debbie Harrison, director of regulatory and government affairs, Business Group on Health. Employer-based coverage has seen increases of 5%-6% year over year for the past several years, she said.

“This is unsustainable over time, in our opinion,” she said. Harrison noted that the top medical condition driving employer health care claims is musculoskeletal conditions, followed by cancer.

She said a survey taken of large employers prior to the COVID-19 pandemic showed 52% of large employers said their top health care priority for 2021 is to implement more virtual care solutions, followed by 36% who wanted to prioritize expanding access to mental health services.

As a result of the pandemic, she said, 76% of large employers made changes to their health plans to allow workers better access to virtual care, 71% offered paid administrative or emergency leave to workers, and 43% added new mental health benefits or offerings to support employees working from home.

Looking ahead from the pandemic, Harrison said 10% of large employers plan to add musculoskeletal care management and physical therapy to their virtual offerings while 5% said they plan to add virtual care for prenatal health management or fertility care in the next three years.

Only 6% of the employers surveyed said they plan to mandate workers take the COVID-19 vaccine, while 71% said they plan no such mandate and 24% are unsure.

“Employers would rather use persuasion and encouragement to take the vaccine instead of mandating it,” she said.

Susan Rupe is managing editor 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 [email protected]. Follow her on Twitter @INNsusan.

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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 [email protected].