Workers would no longer get their health and retirement benefits directly from employers, but would shop through regional “benefit administrators,” under a proposal released last week by a group representing more than 100 of the nation’s largest employers, including IBM, Tyco, DuPont and General Motors.
If adopted, the proposal could fundamentally alter how more than 160 million Americans get their health and retirement coverage, allowing employers a more arms-length approach to offering benefits.
The proposal, which would need Congressional approval for some elements, comes as lawmakers in the states and Congress debate ways to reduce the number of uninsured and as employers express growing frustration with rising health insurance costs.
It’s one of the first detailed approaches presented by American business in the current wave of interest in health reform. The proposal would:
• Require everyone to have health insurance, and require workers to make contributions to their own retirement accounts.
• Allow employers to choose between sending workers to private-sector benefit administrators to select coverage or to continue to offer health and retirement benefits in-house.
• Create several standardized health insurance plans for benefit administrators to offer.
• Allow the self employed and unemployed to purchase coverage through the administrators and create subsidies to help lower-income people.
“This is middle ground between a total individualized system, which we don’t think works, and single payer, which we also don’t think works,” says Mark Ugoretz, president of the ERISA Industry Committee, which drew up the proposal. “It retains the employer commitment and influence and offers universal coverage for all Americans.” About 115 Fortune 500 companies are members of the committee named for the Employee Retirement Income Security Act.
But some consumer advocates see the proposal as an acknowledgment that employers want out. “This is the final death knell for employer-based health insurance, when big employers say they don’t want to manage the benefits,” says Jamie Court of the Los Angeles-based Foundation for Taxpayer and Consumer Rights. “If they don’t want to manage the benefits, we should expand Medicare to cover everyone.”
Legislation would likely be needed for parts of the industry committee’s proposal, such as requiring individuals to buy health insurance. The committee’s proposal does not include cost estimates.
Employers would have the option of fully funding health insurance coverage, or requiring workers to pay part of it themselves, just as they do under the current system. Ugoretz says that employers are not trying to get out of offering benefits. “We want to keep employers in the game,” he says. “But we’re not in the business of running a retirement mutual fund. We’re not in the business of running a health plan.”
