Employers lead the way on benefits

The Amazon-Berkshire Hathaway-JPMorgan Chase initiative to provide health coverage a new way — details to follow — has justifiably generated excitement. But far from being feared, “disruption” is welcomed by individual and employer purchasers of health services as a spur to innovation.

More puzzling is the assertion that this development suggests that the long-term play should be de-linking employers from health coverage. That would be a serious setback for 178 million Americans covered by employer plans. This system is made possible by enlightened, bipartisan policy promoting employer-provided coverage.

Critics note the very large tax loss associated with employer coverage. But they overlook what an enormous bargain it is for the federal government. In fiscal 2015, the $145.5 billion tax revenue loss made possible employer health expenditures of $671.9 billion. That is return on investment for taxpayers of $4.61 of benefits for every $1.00 of forgone taxes.

Moreover, the non-partisan Con- gressional Budget Office found that employer plans cover 83% of health claims, compared with 60% for individually purchased plans. This translates to annual out-of-pocket expenses of $1,765 for a family enrolled in an employer plan compared with $4,127 for a family buying non-group coverage.

The value of employer involvement is not just the monetary savings of group purchasing. Employers lead the way in innovations aligning cost and quality outcomes — sponsoring wellness programs and directing employees to Centers of Excellence where patients get care from the best providers. In a recent survey asking, “Who do you most trust as the source for high-quality health care coverage?”, 43% of respondents said employers — far outpacing the individual insurance market or federal and state governments.

The Amazon-Berkshire Hathaway-JPMorgan initiative is a vote of confidence for the positive role of employers in providing coverage, not a message that the system needs to be replaced.