The Governor's
Proposed Healthcare Plan -- Employers Pay Once Again...
These
days it seems that everyone is talking about it. Interest in universal
healthcare has reached a critical mass of sorts, resulting in a variety of
federal, state, and local proposals for reform.
President
Bush spent much his State of the Union Address discussing his proposal. At
the statewide level, Massachusetts has
already enacted some form of universal coverage, and on January 8th,
Governor Schwarzenegger unveiled his proposal to reform healthcare in California. Local
municipalities, such as the city of San
Francisco, are set to begin implementing programs
aimed at providing services to the uninsured later this year.
Employers
have reason to be encouraged that the issue has finally reached center
stage. In its 2004-2005 Workplace Forecast: A Strategic Outlook, the
Society of Human Resource Management (SHRM) cites the rise in healthcare
costs as the number one concern of HR professionals. While true relief may
yet be a ways off, the opportunity for improvement may be at hand. Here is
a look at some of the proposals on the table, and why you should be
interested in their progress.
How Big is the Problem?
According
to Governor Schwarzenegger's proposal, one in six Californians are
uninsured, a total of some 6.5 million people. Most, nearly 85 percent
work, and two-thirds work full time. While some are the "healthy young
immortals" who decline health coverage, most are the working poor
between the ages of 18 and 34 who can't afford it and whose employers don't
offer it.
What are the Barriers?
Healthcare
costs have become one of the fastest growing expenses for today's
companies. Growth in healthcare expenses outpaces both inflation and wage
growth. According to an analysis from the Governor's office, the annual
increase in health insurance costs is 11 percent nationwide. The number of
employers offering job-based coverage has declined, and companies that
continue to offer coverage have cut back on benefits and shifted more of
the expense to employees.
The
uninsured often wait longer to get medical care, are sicker when they
finally do seek treatment, and are more expensive to treat as a result.
Hospital emergency rooms are required by federal law to take everyone
regardless of ability to pay. This increases costs and forces
administrators to find other sources of funding, raise prices for those who
can pay, and file for bankruptcy or close if unable to continue operations.
Preventive
care, which has long been shown to have a significant impact both on
overall health for the individual and reduced costs for the system, doesn't
provide the same incentive in the current American medical system.
In
an article published in January 2007 in the New York Times, "a lack of
health insurance is only one of two huge problems with healthcare. The
other is the perverse system of incentives that nudges doctors and patients
toward expensive tests and procedures when cheaper preventive measures
might actually produce better results."
Technological
advances offer tantalizing possibilities to improve the quality of and
extend life, but come at a significant cost. Further, statistics supporting
whether these new treatments actually achieve their goals are mixed.
Calls for Universal Health Coverage on the Rise
Health
care reform has become a key focus at all levels of government, as
leadership at the federal, state, and local levels push for solutions to
address the problem.
California's
Plan
On
January 8th, Governor Schwarzenegger unveiled a comprehensive health care
reform plan aimed at bringing accessible, efficient, and affordable health
care to everyone in California.
The
plan relies on the central principle that all participants in the system --
individuals, government, doctors and hospitals, insurers and employers --
are responsible for a portion of the solution. According to the Governor's
Health Care Reform Fact Sheet, "California
cannot reduce costs, increase coverage, restore emergency care or achieve
the long-term cost savings that greater statewide health can achieve
without the equal participation of every player."
The
plan is based on three building blocks: prevention and wellness, coverage
for all Californians, and affordability and cost containment. Under the
Governor's proposal:
- All Californians
must have a minimum level of insurance. This will, "...ensure that
those with insurance no longer pay for the uninsured...." In
turn, citizens will, "...have a responsibility to pursue good
health," and contribute towards paying for their coverage.
- Government will
pursue guaranteed federal reimbursements for Medi-Cal,
help low-income families to buy coverage through a new purchasing
pool, and expand Medi-Cal programs for
families earning under $60,000 annually.
- Employers with
more than 10 employees who don't offer coverage will contribute 4
percent of payroll towards the cost of employees' health insurance.
Companies with fewer than 10 employees - a full 80 percent of California's
businesses - are exempt.
- Health plans and
insurers must guarantee access to all, dedicate 85 percent of premiums
to patient care and provide incentives for healthy behavior.
- Doctors and
hospitals will receive $10-15 billion in the form of Medi-Cal reimbursements and in turn contribute 2
and 4 percent of revenues respectively, into a fund intended to keep
some of the savings in the system and "support total coverage and
increased Medi-Cal rates to providers."
Reaction
to the plan has ranged from guarded, as members of the business and
insurance communities analyze the proposal for the effects on cost, to
supportive, as patients' rights and health associations express relief and
optimism that a comprehensive discussion is finally taking place.
Some Municipalities Take Action
Voters
in San Francisco
recently approved a plan addressing services for the roughly 82,000
uninsured adults living within city/county boundaries. Interestingly, the
plan does not consider itself to be health insurance per se, nor does it
see itself as competing with other state and federal proposals for
universal coverage, Rather, the San Francisco Health Access Program (SF
HAP) is intended to be an affordable alternative to health insurance,
complementing rather than replacing existing employer- and state-provided
coverage.
It
is based on principles similar to the state plan of shared responsibility
among all constituents, and emphasizes disease prevention, access to
affordable services, and choice of health providers.
The
major components of the plan include:
- Eligibility for
all San Francisco
residents, regardless of employment or immigration status.
- No exclusions for
pre-existing conditions.
- Voluntary employer
contributions to provide health access to employees. Individuals may
also enroll on their own.
- Providers from the
existing San Francisco Health Plan provider network.
- Financing through,
"...a combination of employer, individual, (and) City and County of San Francisco contributions,
and other public sources.
Authors
of the plan estimate its cost at $200 million annually, and plan a phased
approach to implementation, which is set to begin in July 2007. Advisors to
the Governor's plan as well as others offer cudos
and express no concern over compatibility with the state proposal.
What You Should Do
- Encourage employee
wellness, either through a formal EAP or your own efforts. A healthy
workforce will be more focused on your business and less expensive to
insure.
- Make a strong
commitment to workplace safety -- not only does it reduce your
workers' compensation premium it gets the message across that you care
about employee health and wellness.
- Participate in the
discussion -- as you are part of the solution!
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