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By MATTHEW BRODSKY, senior editor/Web editor of Risk & Insurance®

There hasn't been any sunshine when Congress has been gone on summer recess, and the outlook is even stormier when the healthcare debate resumes in Washington, D.C., later this month. The forecast could be bleakest for employers, especially self-funded ones, who are left guessing which way the winds of reform will blow.

A recent survey of 60 healthcare insurers found that healthcare costs for employers could increase on average by 10.5 percent over the next year.

Meanwhile, self-funded employers cringe at the possibility that federal reform efforts could limit their rights to run benefits programs that are as cost-effective and creative as they please.

FIRST, THE COSTS

Aon Consulting, the unit of Chicago-based brokerage Aon Corp. that carried out the aforementioned survey, looked at costs across various healthcare plans, from HMOs to POS plans, PPOs to consumer-directed offerings.

The double-digit increases across all plan varieties aren't just for employers that purchase health insurance through the traditional market. Self-funded employers can also look to this survey as an indication of the costs they'll face, according to Tom Lerche, healthcare leader and senior vice president for Aon Consulting.

Yet despite more double-digit inflation, self-funded employers can also take heart in the better news coming out of the Aon survey: a slight downtick in medicals costs, lower drug costs and increased access to coverage over the last few years.

"It is less bad, and it is not getting any worse," summed up Lerche. "All we can offer is modest good news."

ERISA ATTACKS

Can there be such a silver lining on the legislative front? Perhaps not, if you listen to the Self-Insurance Institute of America Inc., the trade and lobbying group that represents self-funded employers and the vendors that support them. SIIA is up in arms against the House healthcare bill, titled "America's Affordable Health Choices Act." HR 3200 as it is known has passed three House committees and could be on the full floor for debate when Congress reconvenes in September.

As it stands now, the House bill could impact 10 self-funded employers in 10 ways, as counted by SIIA.

Readers can access the SIIA Web site for this list, but the gist of it is that the House bill would establish a new legal framework that would replace the current system based on ERISA--which provides national and regional employers a federal pre-emption to establish consistent self-funded benefits plans across state lines.

"HR 3200 as it is written would eliminate the incentives that ERISA provides to employers in federal pre-emption and benefit plan design. That would create a vacuum in health coverage," said SIIA Chief Operating Officer Mike Ferguson in a press release, the second such warning the organization's released this summer.

"The giant sucking sound you will hear will be the flow of individuals migrating to rigid 'one-size-fits-all' private or public health plans that will be less beneficial and less efficient," he added.

Without the dramatic language, Lerche also said he sees several provisions in the House bill that could pose a risk to self-funded employers if passed.

HEALTHCARE REFORM GOOD

Still, many employers are awaiting healthcare reform, crossing their fingers for legislative action in the hopes that it will immediately tackle the double-digit inflation.

This sentiment is out there, so much so that Lerche felt the need to dampen it, saying, "If you're waiting on a silver bullet or solution out of Washington, you're going to be disappointed."

His point: Any cost control out of reform won't be felt for another year or longer.

Still, employers can be excited now about some aspects of healthcare reform. Bob Berglund, vice president of employee benefits and insurance at Boyd Gaming, is one. He and a group of other employer representatives met with several senators, including the famed Blue Dogs (conservative, swing-state Democrats), back in July. The senators picked their brains on how these employers have been "bending the healthcare curve downward" through disease prevention, detection, and management.

"They're intrigued by it," reported Berglund. "They were listening to us."

The good news: the senators were saying that the early detection/prevention idea has bipartisan support and should survive in the final bill.

And more good news: From the policymakers Berglund spoke with, he did not get the "overwhelming sense that they were looking at us critically at all."

Instead, it was a "real positive sign" that federal lawmakers invited self-funded employers to share their experiences.

September 1, 2009

Copyright 2009© LRP Publications