ERIC Urges Congress to First “Do No Harm” in Seeking to Reform Health Care
The ERISA Industry Committee, www.eric.org
Washington, D.C. — Michael Stapley, President and Chief Executive Officer of Deseret Mutual and Vice Chair of The ERISA Industry Committee, a Washington, D.C.-based trade association representing America’s largest employers, testified today before the House Education and Labor Committee where he urged Congress to first “do no harm” in seeking to reform the U.S. healthcare system.
Stapley testified that “ERIC strongly supports reforms to the nation’s healthcare system that will increase its efficiency, reduce costs, and extend health care coverage to those who are uninsured or underinsured,” and outlined areas that ERIC can support in a responsible healthcare reform initiative and areas where ERIC has concerns.
Pressing on the cost issue, Stapley said that “reform that fails to focus on cost control will not only prove ineffective but will undermine health care coverage.” Increasing costs, he said, threaten the competitive viability of U.S. companies while spiraling increases in Medicare and Medicaid threaten national financial solvency.
“ERIC strongly supports a competitive, pluralistic health care system in which employers and individuals have choices among several health plans that compete on the basis of quality, cost, and effectiveness,” Stapley said. He added that, “ERIC believes that a properly designed, responsibly regulated pluralistic system will be able to correct the deficiencies in the current system and produce significant improvements in costs, quality, and access.”
Stapley noted that ERIC’s New Benefits Platform for Life Security released in 2007 laid out a framework for overhauling the country’s national approach to providing health and retirement security, and that many of the positions in the Platform have been included in various proposals. He said “ERIC’s Benefits Platform supports the establishment of an insurance exchange or gateway that provides a fair and equitable method for the distribution of insurance products. If exchanges are established, they should follow uniform national standards.”
He cautioned, however, that employers “should not be required under any circumstance to provide financial resources to employees to purchase insurance through an insurance exchange when the employer has chosen to offer a plan. To allow this would create systematic adverse selection problems that could ultimately result in the demise of the employer-based system.”
Stapley also testified that ERIC has serious concerns with limiting the ability of an employee to exclude from income the value of employer-provided health insurance. “If this exclusion were curtailed, many large employers would follow one of two approaches. Some would redesign their plans to meet the new cost standard in the legislation, below which taxation would not be imposed. . . . Other employers would choose to keep their existing plans; if the value of the plan exceeded the standard in the legislation, employees would face taxation on the ‘excess’ value. If this were to occur, employment-based insurance would suffer.”
ERIC members also have several serious concerns with a public plan modeled after Medicare that would compete with the current private marketplace. Stapley said that ERIC’s “most fundamental concern with a public plan based on Medicare is the potential for even greater cost-shifting than exists today,” and that right now ERIC members subsidize the cost of Medicare, including both administrative and claim costs. Thus, as presently envisioned, the public plan is unsustainable.
Moreover, Stapley explains that ERIC is also concerned about the adverse selection that would be experienced if individual participants in employer-sponsored plans were permitted to opt out of the employer plan and into a public plan. “If permitted, an opt-out would undermine the demographic fairness of a large risk pool that is a feature of employer plans. Over time, young, healthy employees would seek cheaper coverage outside of the employer’s plan, and older, sicker employees would remain in the plan,” Stapley said.
Stapley concluded by saying that any reform proposal must provide for national uniformity as well as the inviolability of ERISA preemption. “Without the national uniformity made possible by ERISA’s preemption doctrine, large multistate employers simply could not offer quality healthcare coverage to their employees. Its importance was recognized by the original sponsors of ERISA as critical to ensuring that employers provided sound and secure benefits. Any future legislation must continue to accord preemption and national uniformity of regulation a similar priority,” Stapley said. He pointed out that employees, who are often moved to various locales during their careers, or live, work, and receive medical care in multiple jurisdictions depend on the national uniformity of ERISA’s preemption provisions.
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