Doom and gloom.
Speaker after speaker at the recent convention of the International Foundation of Employee Benefit Plans in Las Vegas worked that theme, pointing out demographics is destiny. And the figures are pointing to tough days ahead.
A flood of retiring Baby Boomers will strain the liquidity of underfunded pension plans still struggling to recover from the Great Recession’s devastating impact on investments. The healthcare system is broken and unsustainable. As a consequence, the promise of retiree health benefits, a staple of corporate and union packages for decades, is being shredded. And a shift tied to the Affordable Care Act is reshaping medicine from cost-based pricing to price-based costing.
Robert Tesssier, president of the Connecticut Coalition of Taft-Hartley Funds, sat amid the exhibit hall chatter at the Mandalay Bay resort in Las Vegas and shook his head. “I don’t share all the doom and gloom,” he said. “But I also can’t say those who take that view shouldn’t worry or that they’ll be wrong in the long run.”
Tessier’s Connecticut coalition includes a host of building trades, more than 20,000 of the state’s unionized plumbers, carpenters and electricians. It manages a self-funded set of benefits that up to 60,000 workers and their families depend on. And those benefits are under pressure on several fronts.
Tesssier fended off a question about the impact of Obamacare. Nobody knows, he explained. The information coming out is late and fragmentary. There’s just so much that remains unknown.
Tessier knows a great deal about Obamacare. He serves as an advisor to the Connecticut health insurance exchange, Access Health CT. And he’s proud of Connecticut’s effort, although he points out the state’s exchange plans carry the fourth highest cost in the nation.
While supporting the concept of Obamacare as a step toward universal coverage, he’s unhappy about so much of the execution, particularly the slowness of making and communicating decisions.
One decision that strikes close to home is a recent ruling that coalition health plans like the ones he works with do not qualify for tax advantages under the Affordable Care Act. It’s too early to tell the full impact, Tessier says, but it can’t be good. Short-term, there’s no exodus of members but he can’t be sure what may lie ahead when contracts expire. And he fears part-time workers increasingly will be shut out of benefits.
Among his other roles, Tessier is president of the National Labor Alliance, a group that provides group purchasing assistance to union benefit plans. That group had a booth at the convention as it tried to reassure its members while marketing a new stop-loss program that provides an insurance backstop for self-insured plans fearing catastrophic claims.
Despite the looming clouds, Tessier remains optimistic that the U.S. will find its way through the briar patch and build a first-class healthcare system that’s affordable. The elements are there, he said, if the political will can be found.
Tessier was a supporter of a plan that would have opened Medicare to those 55 and older. Getting younger, healthier people into Medicare would have slowed that program’s rush toward insolvency. And he blames Connecticut’s Joe Lieberman for the death of the plan. The former senior senator, who served as an independent, chose to play politics and withdrew his support at the 11th hour to punish Democratic leaders, he said.
Long-term, Tessier believes a single-payer plan will emerge, if not at the federal level, certainly at the state level.
If he’s correct, one of the drivers in that direction may be the emerging trend of adjusting medical costs to the price the market will pay, rather than adjusting the price to the cost.
In a presentation that had the employee benefits managers buzzing, Nathan Kaufman of Kaufman Strategic Advisors in San Diego made the case that pricing pressures are redefining health care. He cited the example of CalPERS, the powerful and trend-setting California Public Employee Retirement System, capping the cost of a knee replacement at $30,000. The figure was reached after a survey found wide disparity in costs for the procedure across the state. Not surprisingly, the figure CalPERS chose is at the low end of the range, setting up a challenge for hospitals to meet the price or lose patients.
He then connected the dots to include:
The Affordable Care Act’s emphasis on efficiency, including the mandate for electronic records;
The rush of hospitals grabbing up physician groups to assure a flow of patients and consolidating to achieve purchasing and capital efficiency;
The bitter battles pitting insurers against hospitals and physicians, groups that just don’t understand each other;
And a shift to patients having a hard-dollar stake in the cost of care.
Tessier acknowledged that Kaufman’s presentation had given him a host of new perspectives and a lot to think about. But it didn’t shake his optimism that America will find an answer. “We have to,” he said.
