09 Sep Make Employers’ Provision of Group Health Insurance Easier, Less Costly

More than half of all Americans receive health insurance through an employer. Let me advance a bold premise: This is not entirely a bad thing. By insuring 150 million of us, employer-based plans relieve government of the burden of funding our insurance and care, allow doctors and hospitals to be adequately paid for the treatment they render, and permit them to supply that care promptly.

My point here is not to argue that the current system doesn’t need fixing – of course it must be improved, and more people need coverage. My point is that in the process of attempting to improve the system, government should acknowledge this: Employer-based coverage has some real virtues, and if Washington is going to be involved in that effort it should facilitate the employers’ undertaking, not make it unduly costly and burdensome.

Additional Burden

Lockton Benefit Group just completed a survey of its 2,500 mostly middle market clients, and 80 percent of the more than 1,000 who responded said they were concerned or very concerned about the additional burdens last year’s healthcare reform law puts upon administration of their group plans. With good reason.

Even prior to healthcare reform the sponsor of a simple group health plan was required, under federal law and regulations, to provide up to 33 different notices, disclosures and reports to enrollees or the federal government. Healthcare reform adds up to 19 new ones, so far. That’s up to 52 notices and reports under federal rules, for a health care plan.

These health plan notices and reports go to different individuals, at different times, often via different means. Some can be combined with others, some can’t. Some must be “prominent,” some in specific-sized font. A few can be posted, most cannot. The employee can be entrusted with some, while others must be mailed home. Some can be provided online, others cannot. Few employers will have to deliver the full 33, but no matter, they must deliver most, and many must be supplied more than once, often annually.

Failure to supply all these disclosures, at the right times, can trigger huge penalties upon the employer, who all the while is endeavoring to remain focused on providing goods or services, and jobs.

Significant Cost

Let’s find some perspective here. These employers are not processing radioactive waste, or engaged in some other hazardous effort where we’d insist they ensure employees understand the deal. We’re talking about sponsoring a healthcare plan.

There is significant cost to these notices and reporting efforts. Washington, when it levies a new notice obligation, usually attempts to quantify the time and cost burden on the plan. Standing alone, the burden of any single notice is not overwhelming. There appears, however, to be no effort to quantify the aggregate burden, and to weigh it against the true value proposition.

Why the monstrous administrative burden? Washington needs some of the reports to do things it’s required to do. Some of these things are actually useful, like helping Medicare save money. And some of the notices to employees – such as COBRA notices – are important enough to outweigh the burden. But the panoply of other notices to employees has long-reached the tipping point where the burden, particularly in the aggregate, outweighs the virtues.

Here’s how I know.

First, I have some modest level of common sense.

Second, Lockton employees have witnessed countless health plan enrollment meetings where these notices literally litter the floor, particularly around the trash can. Are some employees interested? Sure, a few. So let the employer make those notices available online or on a bulletin board to anyone interested enough to look. I’d even be willing to require the health plan booklet to “prominently” tell the reader where to find the notices.

Let’s synchronize the timing of as many of these notices as possible, and not require things like specific-sized fonts. Let the employer consolidate most notices in a single pamphlet or e-file.

Employers are not looking for a “thank you” from Washington, for supplying insurance to employees. But they don’t deserve to be slapped upside the head either. Health plans are costly enough as they are. Let’s restore a little balance, a little sanity to the endeavor, and not give our nation’s employers yet one more reason to throw up their hands and exit the group insurance game.

By Ed Fensholt