On the rise
Reform could help curb soaring costs: study
Policymakers continue to grapple with how to sustain employer-based health coverage while businesses say they’re struggling under the rising cost of premiums and new federal requirements. As insurance premiums continue to rise far faster than wages, more focus needs to be placed in addressing the underlying costs of care, experts say. The Commonwealth Fund con- and families have been giving up wages to hold onto their health insurance.”
The report is the latest in a steady stream of findings that healthcare premiums are escalating at an alarming rate, and more of the costs are being shouldered by workers. Last month, Modern Healthcare found in an annual Healthcare Purchasing Power survey of large employers that cost-shifting to workers in the form of Committee on Commerce, Science and Transportation took on this issue in a hearing last week on “mini-med” health plans, or limited benefit plans, which provide coverage to about 1 million low-wage workers.
Mini-med plans are expected to be extinct by 2014, when the exchanges are up and running and low-wage workers can qualify for federal subsidies to buy insurance. But until then, their merits are being hotly debated. Sen. Jay Rockefeller (D-W.Va.), outgoing committee chairman, held the hearing as part of an ongoing investigation into these plans.
In the meantime, more than 100 employers and insurers offering mini-med plans have qualified for one-year waivers from HHS in meeting new rules, effective in January, requiring insurers to spend 80 cents of every member premium dollar on patient care or quality improvements for small-group and individual plans, and 85 cents per dollar on large-group plans.
McDonald’s was among the first employers to request such a waiver. The fast-food giant offers three mini-med plans with annual spending caps of between $2,000 and 10,000 a year. The company also offers more comprehensive insurance at a higher price.
Hourly McDonald’s workers are only willing to pay between $5 and $20 per week for insurance, testified Rich Floersch, executive vice president of human resources at the company. The challenge is finding coverage that works at this price range, and mini-med plans fit the bill, he said.
Some agree with McDonald’s that minimed plans are one answer to the rising costs of healthcare. “Limited benefit plans provide a level of benefits many Americans rely on, and the loss of coverage would make them worse off,” said Devon Herrick, senior fellow at the National Center for Policy Analysis, a freemarket think tank. Herrick added that comprehensive benefit packages, required by the reform law starting in 2014, could further erode wages.
Some members of Congress have been trying to extend relief to employers. Last week, the Senate considered two bills to repeal a provision in the reform law requiring businesses to file 1099 tax forms on each purchase over $600. Both measures failed because the provision is expected to generate about $19 billion in revenue for the federal government over 10 years.
And Thursday, the Treasury Department issued guidance on a 35% tax credit for employers with fewer than 25 workers to pay for healthcare costs. The rules make clear that a wide range of the smallest employers with various health coverage arrangements can qualify.