©2019 AMERICAN HEALTH POLICY HEALTH INSTITUTE ©2019 AMERICAN NEARLY ONE DECADE AFTER THE PASSAGE OF THE AFFORDABLE CARE ACT, health care continues to be a top issue among voters in the U.S., with the two major parties offering distinctly different visions of the direction of future reform. To help CHROs, their teams, stakeholders, and the public better understand the health care landscape and the prospects for change, the American Health Policy Institute examines the various types of reform proposals currently being discussed among policymakers, political candidates and other key stakeholders. OBJECTIVES OF THE DISCUSSION We aim to increase awareness of the spectrum of potential future health care reforms that may be proposed over the next two years—and help senior HR leaders assess the implications of various types of reform on their future business and talent strategies. We will also use this information as the basis for follow-up discussions with members that will help shape the Association’s objectives. AMERICANHEALTHPOLICY.ORG UNDERSTANDING HEALTH CARE REFORM THE U.S. HEALTH CARE The majority of insured Americans HEALTH INSURANCE SYSTEM IS UNIQUE receive coverage through an COVERAGE OF THE employer-sponsored plan. Of 327 TOTAL POPULATION The U.S. health care system is million Americans, nearly 160 million % ©2019 AMERICAN HEALTH POLICY HEALTH INSTITUTE ©2019 AMERICAN unique among industrialized 49 EMPLOYER get coverage through employment. 19% MEDICAID nations in two important ways. 14% MEDICARE First, the system does not provide The percentage of Americans with 09% UNINSURED for universal coverage for all employer coverage reached 65.1% 07% NON-GROUP 1 citizens. Second, for most in 2009. That percentage declined 02% OTHER (PUBLIC) Americans, access to health over the last decade until turning Source: Kaiser Family Foundation, 2016 care coverage is linked to upward again in 2018. Nearly 70% employment. of private industry workers are now offered health care coverage The U.S. health care system is from their employers—and among ORIGINS OF EMPLOYER- built on the concept of private SPONSORED INSURANCE union members in the private sector competition, with IN THE U.S. sector, availability is almost government playing a more limited universal at 94%. Slightly less than WWII resulted in a severe labor role compared to other developed three quarters (72%) of private shortage. Employers increased nations. About half of Americans salaries to attract workers. Worried sector workers who are offered that inflation would rise at an get coverage through their coverage actually opt to take it.iii unsustainable rate, President employment while roughly one Roosevelt froze wages. Employers, third are covered by government searching for ways to attract new talent, began to offer health plans. A small number (7%) .ORG insurance as a benefit. purchase their own individual Read more. insurance policies, and about 9% remain uninsured. AMERICANHEALTHPOLICY UNDERSTANDING HEALTH CARE REFORM Coverage among large employers has necessarily as a source of RISE IN NON-TRADITIONAL remained steady over time, but smaller competitive advantage in attracting EMPLOYMENT employers began to drop coverage at talent. A 2018 HR Policy survey ARRANGEMENTS higher rates following the passage of shows that 71% of employees Non-traditional workers (gig the Affordable Care Act. The number value their health benefits and it economy, independent of small firms offering health benefits continues to be a key to their contractors) are at a disadvantage to their workers dropped by 24% employment decisions ranking just when it comes to health benefits because they do not qualify for iv between 2012 and 2016. behind compensation. group health insurance. As part-time and “gig economy” Over one third of the workforce is work increases, the percentage of THE FEDERAL REGULATORY estimated to have freelanced in ©2019 AMERICAN HEALTH POLICY HEALTH INSTITUTE ©2019 AMERICAN FRAMEWORK the past year. Freelancers are working Americans receiving often more politically active; 70% coverage connected to Employers operate their plans say they would cross party lines to employment is likely to decrease— vote for those who support their under a well-established legal interests. The number one public as many of these arrangements do framework, the centerpiece of policy issue for freelancers? not qualify for benefits coverage. which is the Employee Access to affordable health care. Retirement Income Security Act Read more. MOST LARGE EMPLOYERS (ERISA). In addition to REMAIN COMMITTED TO establishing the regulatory HEALTH CARE COVERAGE framework for benefit plans, one THE IMPORTANCE OF of ERISA’s most significant ERISA PREEMPTION While many small employers have elements for employers is “ERISA stopped offering health care preemption.” Practically speaking, If ERISA preemption were coverage, most large employers ERISA preemption means that abolished, many employers could decide the burden of offering remain committed to this benefit as employer-sponsored health care health care coverage is too great. a key part of their total plans that comply with ERISA’s Employer groups—including HR compensation package. Many are provisions are relieved from the Policy Association—have long going further and linking coverage burden of complying with state defended this provision with to creating a culture of wellness – policymakers at the federal level. and local laws that regulate insured .ORG a key addition to their employment health plans. Read our piece on ERISA value proposition. Other employers preemption: “The Need to view coverage as a necessary part Strengthen ERISA Preemption.” of a basic employment offer – not AMERICANHEALTHPOLICY UNDERSTANDING HEALTH CARE REFORM ERISA imposes duties on • The Cadillac Tax: While WHY EMPLOYERS OFFER employers who offer benefit plans Congress has delayed the HEALTH INSURANCE to act in the best interests of their Cadillac Tax’s effective date to • Keeps employees healthy and plan participants—which among 2020, if implemented, the productive on the job; other obligations, means employer provision will impose a 40% tax • Adds to corporate ethos and a sponsors must ensure that plan on employer-sponsored health culture of health; funds are spent responsibly. This coverage that provides value in • Serves as a driving force in can be a challenge in the health excess of certain dollar caps. employee retention and is vital to care arena, as companies don’t Read more on the Cadillac Tax. securing a robust workforce; always have insight into the • Employees appreciate, desire, • Reporting Requirements: and expect health insurance ©2019 AMERICAN HEALTH POLICY HEALTH INSTITUTE ©2019 AMERICAN pricing and quality data of their administrators and providers. For Large employers must file an • Efficient way to administer health more on this, see our piece “Erisa annual return. coverage to large numbers of people; and Fiduciary Responsibilities for • Provide a statement to each Health Care Plans.” • Employers are in a position to full-time employee – reporting seek financially sustainable rates, whether they offered health whereas they would have less THE AFFORDABLE CARE ACT control if they were to send insurance, and if so, what employees to the exchanges. health coverage they offered The second major piece of their employees. Read more. legislation, the Affordable Care Act (ACA,) impacts employers in In addition to complying with the following ways: federal regulations under ERISA and the ACA, employers must also • Employer Mandate: Large ensure that their benefit programs employers are subject to a comply with federal tax law. payment if the employer does Employee health benefits are tax- not offer affordable coverage exempt, meaning that the amount that provides minimum value to an employer spends toward its full-time employees and their employee coverage is not dependents. considered taxable income to the .ORG employee. This tax-preferred treatment provides a financial incentive favoring employer- AMERICANHEALTHPOLICY UNDERSTANDING HEALTH CARE REFORM sponsored health care coverage. accounts. The City of San including Vermont, Colorado and The tax code also regulates Francisco was sued over the California. We’ll examine these employer plans that allow ordinance, but the 9th Circuit reform initiatives in more detail employees to contribute pre-tax Court of Appeals upheld the later in our paper. income to a health care savings law, and the U.S. Supreme account. Court refused to hear the case THE U.S. SYSTEM IS COSTLY on appeal. Read more about the benefits of Health care is one of the most the tax-preferred status of • Michigan self-insurance important—and contentious— employer-sponsored health claims act (since repealed): In issues in the U.S. In the campaign coverage. 2011, the State of Michigan ©2019 AMERICAN HEALTH POLICY HEALTH INSTITUTE ©2019 AMERICAN leading up to the 2018 midterm passed a law requiring Third STATE-LEVEL ACTIVITY elections, surveys indicated that Party Administrators, insurance health care was one of the top While employer self-funded health carriers and HMOs to charge three issues of concern to voters.2 care plans are generally not and collect a 1 percent tax on And the primary reason for this is required to comply with state laws, health care claims paid for cost. The cost of employer- recent actions by states and local Michigan residents who sponsored health benefits is governments have threatened to received health-related services expected to grow to