Statement of Janet Boyd – Chairman, National Coalition on Benefits Committee on Education and the Workforce
Good morning Chairman Roe and Chairman Kline, I am Janet Boyd, Director of Government Relations and Legislative Counsel for The Dow Chemical Company, and am speaking today on behalf of the National Coalition on Benefits (NCB). The NCB is a coalition of businesses and employer associations that are working together to support preserving employer-sponsored coverage. For decades, more Americans have relied upon their employers for health coverage for themselves and their families. Employers have embraced this important role as a way to recruit and retain workforces; there is a business imperative for our engagement. Employer-sponsored coverage should be retained. We appreciate the opportunity to provide you information on what is working, what is not working and how we can assist with your efforts to examine the future of employer health care coverage.
There are over 181 million Americans who receive health care coverage through their employer – and with a total U.S. population of 316 million – that means more than half of all Americans get coverage at work. Many companies in America work hard to ensure quality and affordable coverage for their workers. Today, I would like to stress three key points:
- The foundation of employer-sponsored coverage is the Employee Retirement Security Act (ERISA). This law permits multi-state employers to offer the same coverage to all employees no matter what state they live in and to adopt consistent rules governing the administration of the benefit to all employees. ERISA requirements apply to all employers that offer benefits. We urge you to protect and preserve ERISA and to find ways to promote greater simplicity and predictability in the implementation of those rules. Simplicity and predictability will permit employers to continue offering coverage, lower costs and provide greater health and financial security for millions of Americans.
- Any alternative to the Affordable Care Act should preserve the favorable tax treatment of employer-sponsored coverage. Taxes and burdensome regulations only increase costs and limit employers from innovating in benefit design and ensuring affordable coverage. One of the challenges with the ACA are the unnecessary taxes in the law, with a specific emphasis today to support the repeal of the 40 percent tax on health care benefits. This tax will not reduce health care spending or “bend the health care cost curve.”
- We urge you to support policies that foster greater innovations in employer-sponsored coverage. Employer innovations can help create a more cost effective health care system. Companies are driven to keep the overall cost of programs down – both for themselves and their employees. Employers have designed innovative programs, such as wellness programs, on-site clinics, pooled purchasing, telemedicine and mobile treatment and diagnostic programs to make it easier for employees to access good, quality care. Employers are enthusiastic about these efforts – and we believe these are tools that can be used or help to sustain other programs, such as Medicare and Medicaid.
Let me provide more specifics on each issue:
ERISA IS THE FOUNDATION
ERISA is the foundation of employer-sponsored coverage and we encourage you to strengthen the protections under ERISA. ERISA permits employers to offer uniform employer-sponsored coverage nationwide. This leads to better benefit design, reduction in administrative costs through economies of scale and increased purchasing power. Employers demand quality and efficiency from the health care providers with whom they contract, applying best practices across all markets.
Every employer is different. The cost of employer-sponsored coverage has been estimated at $6,250 for single coverage and $17,500 for family coverage.[1] However, each employer-group plan has different characteristics of those they cover – older, younger, sicker, retirees, families. Employer plans need to vary, depending on their specific workforce demographics. Three-fifths of employment-based health insurance is offered through self-insured plans and purely governed under ERISA. We urge you to support the employer-based system and ERISA protections that could impact the value of these benefits for American workers and their families.
Most importantly, 88 percent of workers report that employment-based health insurance is extremely or very important, far more than for any other workplace benefit.[2] We encourage you to retain employer-sponsored coverage in your health care plan.
CHANGES TO THE AFFORDABLE CARE ACT (ACA)
Requirements in the ACA that merely add costs to employer-sponsored coverage and limit the innovations that employers may offer should be reconsidered. In particular, the NCB is united in its strong opposition to the 40 percent tax on employee benefits.
According to CBO, the cost of coverage for employees and their families includes:
…The costs of health care generally…determined by the quantity and kind of services that people use and the prices that are paid for those services. Those components, in turn, are a function of the population’s health and need for services, the state of medical technology and treatment options, physicians’ patterns of practice, and various other considerations…A group of enrollees that is older or sick will tend to use more health care and thus will generate high premiums, if other factors are held equal…[3]
Any changes to the tax treatment of employee health benefits will only impact the direct costs of certain plan benefits and not the cost of care. It will impact those employers who employ older workers, who employ workers who may have higher rates of illness and disability or impact those employers who have employees in higher cost states. While some believe taxing these benefits will result in employers buying lower cost coverage, it will not. Employers may not be able to find lower cost coverage – even though employers want their employees to have health coverage.
As a coalition of leading employer trade associations and employers providing health benefits, there are other ways to bend the cost curve. We want to work with you on finding ways to deliver and pay for services that are more affordable. However, adding taxes or complex regulatory requirements on employer-sponsored coverage will only drive up the costs of care and may force employers to drop innovative benefit offerings in the future.
INNOVATIONS IN HEALTH CARE
Employers are adopting strategies to improve the health benefit offerings to their employees and families. At The Dow Chemical Company, for example, we view health spending as an investment for our employees and the value of our company. We have a broad approach to improve patient outcomes, enhance the quality and effectiveness of care, reduce waste and provide better value for every dollar spent.
Other NCB companies are doing similar activities. According to the 2015 Health Care Survey, many employers are adopting innovative strategies to improve the value of the health care benefits and reduce increasing costs. Some of the activities cited include: increase employees’ awareness of and decision making related to health issues; increase employee use of tools and information on provider price and quality; lower health care reform compliance and risk; improve health improvement program compliance; increase the use of integrated delivery systems and high performing provider networks; and other innovative ways to improve the cost and value of employer-sponsored health coverage.[4]
These types of innovations only improve each and every marketplace where we have employees. More can and will be done if Congress reaffirms its support for employer sponsored coverage and permits employers to have flexibility and continuity in offering valued health coverage to their employees and families.
Thank you for the opportunity to discuss the value of ERISA and employer sponsored coverage.
[1] Gary Claxton and others, 2015 Employer Health Benefits Survey (Kaiser Family Foundation and Health Research and Education Trust, September 2015), http;//tinyurl.com/oj7dhwp.
[2] Views on the Value of Voluntary Workplace Benefits: Findings from the 2015 Health and Voluntary Workplace Benefits Survey, Employee Benefit Research Institute, November 2015, Vol. 36, No. 11.
[3] CBO Report: Private Health Insurance Premiums and Federal Policy, Average Premiums for Employment-Based Plans, February 2016
[4] Aon Hewitt, 2015 Health Care Survey Results.
