Health Policy 2009: What a new presidency means to employers, their HR staffs and their bottom lines
From the November 2008 issue of Ceridian Connection.
Health policy stood at the forefront of this country's longest presidential campaign in history. And now that the people have elected Senator Barack Obama as its 44th president, health policy will soon take center stage as Americans are introduced to new changes to our current health care system. In this article, we share a compelling interview with Jim O'Connell, Ceridian's executive consultant in Washington, D.C., who describes what the new administration's health policy might look like for employers, employees and the HR professionals who will implement the changes ahead.
Do you think the new administration will be ready to run with changes to U.S. health care policy on January 21, 2009?
Without a doubt, the answer is "yes," because the issue of health care has been a central theme of the presidential campaign, next to the economy.
As president, what will be President-elect Obama's major health care policy initiative?
The issue of health policy includes cost, affordability of care, accessibility to care and coverage and tax policy. The largest initiative we are likely to see President-elect Obama address after his inauguration is "universal" coverage, an effort by the government to extend insurance to as many of the uninsured as possible. Currently, 45 million people in the United States are uninsured. This has been a concern for many years and most people who follow this issue think this will be a top priority of the Obama administration
How do you achieve universal coverage? What would this initiative include?
During the campaign, Senator Obama was clear on his ideas for expanding health coverage, one of which includes an employer mandate (McCain opposed this). Also known as "play or pay," the mandate states that an employer has a choice of either providing health coverage to workers or paying a higher payroll tax that goes into a fund to subsidize coverage for those who cannot afford it or do not have access to coverage.
The second point for universal coverage is that President-elect Obama would favor a mandate for all children to receive coverage. While there is a program in place, SCHIP (State Children's Health Insurance Program), it has been limited in its funding. President-elect Obama would provide federal funds to expand the program.
A third key element for universal coverage would be a new government-sponsored health plan alternative similar to Medicare but for those too young to qualify for Medicare and those earning too much to qualify for Medicaid.
The final element of President-elect Obama's universal coverage plan is a clearinghouse, or health coverage exchange, similar to the FEHB (Federal Employees Health Benefits). This allows insurance companies to compete and offer their various types of plan designs into an exchange entity. In the federal model, employees are able to pick the plan that meets their needs. People without health insurance could access a similar clearinghouse to buy lower-cost private coverage or the new federal insurance option.
There are many different characteristics of the uninsured, so you cannot have a one-size-fits-all plan. That is why President-elect Obama has different aspects to his plan. We will probably see a comprehensive piece of legislation introduced early in 2009 to address several elements of the universal coverage agenda.
Will the newly elected Congress help or hurt President-elect Obama's efforts at health care policy?
Because of President-elect Obama's long "coattails," in the House and Senate, they will owe the new president strong support on the key issues. Typically, the first year is the "honeymoon" period in which Congress honors a new president's ideas.
As president, how likely is President-elect Obama to be successful at his biggest health care initiatives? How will the American public know if the policies are successful?
When we ask the question about success, we have to introduce the subject of the budget deficit. With the cost of recent initiatives, including the rescue plans and possibly a second economic stimulus package, we have to wonder if these divert funding from a health policy initiative. We must remember that universal coverage is not going to be free. It would be provided through substantial subsidies for the uninsured -- much like subsidies characterize the present SCHIP program. The universal coverage initiative could cost well in excess of $100 billion in new funding per year. We need to recognize that there is a big question mark over all of those elements -- where does the money come from to pay for it? Success could depend on whether or not it is necessary to identify new funding sources. President-elect Obama said one source of funds would be to phase out President Bush's tax cuts for the wealthy. With the current economic slowdown, the Obama administration might decide not to raise taxes for the wealthy if our country is going into a recession. If that is the case, one of the funding sources would not be available. The rescue plan and proposed economic stimulus package will take revenue that could have been used for a health initiative. On the other hand, a universal coverage initiative could be phased in incrementally over time -- easing the short-term funding dilemma.
How will large employers be affected by the Obama administration's health care policy?
Many large employers incorrectly conclude that employer mandates won't affect them since they already offer insurance coverage to their workers. However, it will affect them because mandates could specify a certain type of plan design as opposed to simply offering coverage. During one of the presidential debates, Senator Obama asked, "Why shouldn't you have the same type of coverage that members of Congress have?" If that statement evolves into an employer mandate, it will require employers to offer employees "gold-plated" coverage. That might not be a good idea for employers who are competing in a global economy and trying to cost-share health care coverage with employees. If tightly prescribed, therefore, larger employers could face higher health benefits costs.
How will small businesses be affected by the new administration's health care policy?
Smaller employers are worried about President-elect Obama's plans, especially the idea of the employer mandate. They oppose government health coverage mandates. President-elect Obama anticipated that and proposed an exemption for small businesses of a certain size and also special tax credits so that small businesses could better afford to provide coverage. Still, small businesses are on a state of alert on how a health plan might impact them. Most new jobs in this country are created by small businesses and we must be cautious about saddling them with much higher costs.
How will President-elect Obama's health policy affect HR professionals?
HR professionals are the frontline troops in implementing whatever domestic policies come from the new administration, not just health policy. The country must rely on HR and payroll professionals to make those things happen in the real world of the workplace. HR professionals need to stay informed and be alert to new initiatives -- particularly those that impact their compliance responsibilities. There has been gridlock in Congress on longstanding issues such as health coverage, immigration, family and medical leave expansion, and Social Security. But most likely there now will be a consensus for legislation, particularly with Democrats firmly in control of the White House, the Senate and the House of Representatives for the first time since 1993. HR must be informed and provide input into the process. If there is a new policy, a lot of education will be needed to help policy makers understand the real world implications. HR professionals will need to stay ahead of the curve in many cases regarding policy changes.
What changes to the technology infrastructure do you foresee necessary to implement this administration's health care policies?
Most likely, there will be more emphasis on electronic medical records and e-prescribing via email. All of us should have a patient record that we carry with us and take to various physicians. Another important aspect to consider is wellness and preventive care. If we think about health cost management, we need to promote employee wellness and preventive care. Ceridian LifeWorks is at the forefront of providing employee assistance services for health coaching, chronic illness management services, nutrition advice and other aspects of wellness. As we move to a more consumer-directed health system where people manage their health and wellness, we need technology to support the various aspects of preventive care as well as providing more information on health care cost and quality.
What is the effect of the worsening economy on the health care system?
We have to consider the issue of rising unemployment, which means losing health care coverage, more people on COBRA if they can afford it, and the impact on earnings. The economic slowdown that appears to be heading our way will increase the number of uninsured Americans and will put more pressure on the new president and Congress to do something. There is also more pressure on employers as they face falling revenues and earnings. As their earnings decrease, they are less able to afford the kind of health insurance packages they would like to provide for their employees. As a result, they could be forced to cut back on levels of coverage and/or increase the costs to their employees. There is no question that a severe recession will exacerbate the health coverage issues President-elect Obama promised to resolve.
With unemployment rising and personal bankruptcies increasing, does it still make sense to shift the burden of health care decisions to the consumer?
That is difficult to answer from a national level. Employers are going to continue to shift costs to workers. It is a longer term trend that new plan designs are going to put more financial and decision-making responsibility on employees. If employers are under the recession gun, they cannot provide the same health plans as they did in the past. Deductibles could be higher. The weakening economy will accelerate that trend. As president, will Obama roll back health policies that favor plans such as HSAs (Health Savings Accounts)? I think that is doubtful. You might not see a big expansion of HSAs to make them more attractive, but you probably won't see a rollback either. Too many employers and households are enrolled in HSA-type plans to have Washington, D.C., back peddle on the tax incentives.
With more than 30 years of experience in federal legislative and regulatory affairs, Jim O'Connell focuses on HR and payroll policy issues, keeping customers informed about fast-changing and complex compliance regulations and workforce trends. O'Connell is a frequent participant in national and chapter HR and payroll industry meetings. He is an adjunct professor at Georgetown University in Washington, D.C., and specializes in international business-government relations. O'Connell has been with Ceridian since 1982. Before joining Ceridian, he served in the U.S. Senate as chief legislative assistant to New York Senator Jacob K. Javits and later with Connecticut Senator Lowell P. Weicker. O'Connell holds a Ph.D. in economics from New York's Fordham University.
Health policy stood at the forefront of this country's longest presidential campaign in history. And now that the people have elected Senator Barack Obama as its 44th president, health policy will soon take center stage as Americans are introduced to new changes to our current health care system. In this article, we share a compelling interview with Jim O'Connell, Ceridian's executive consultant in Washington, D.C., who describes what the new administration's health policy might look like for employers, employees and the HR professionals who will implement the changes ahead.
Do you think the new administration will be ready to run with changes to U.S. health care policy on January 21, 2009?Without a doubt, the answer is "yes," because the issue of health care has been a central theme of the presidential campaign, next to the economy.
As president, what will be President-elect Obama's major health care policy initiative?The issue of health policy includes cost, affordability of care, accessibility to care and coverage and tax policy. The largest initiative we are likely to see President-elect Obama address after his inauguration is "universal" coverage, an effort by the government to extend insurance to as many of the uninsured as possible. Currently, 45 million people in the United States are uninsured. This has been a concern for many years and most people who follow this issue think this will be a top priority of the Obama administration
How do you achieve universal coverage? What would this initiative include?
During the campaign, Senator Obama was clear on his ideas for expanding health coverage, one of which includes an employer mandate (McCain opposed this). Also known as "play or pay," the mandate states that an employer has a choice of either providing health coverage to workers or paying a higher payroll tax that goes into a fund to subsidize coverage for those who cannot afford it or do not have access to coverage.
The second point for universal coverage is that President-elect Obama would favor a mandate for all children to receive coverage. While there is a program in place, SCHIP (State Children's Health Insurance Program), it has been limited in its funding. President-elect Obama would provide federal funds to expand the program.
A third key element for universal coverage would be a new government-sponsored health plan alternative similar to Medicare but for those too young to qualify for Medicare and those earning too much to qualify for Medicaid.
The final element of President-elect Obama's universal coverage plan is a clearinghouse, or health coverage exchange, similar to the FEHB (Federal Employees Health Benefits). This allows insurance companies to compete and offer their various types of plan designs into an exchange entity. In the federal model, employees are able to pick the plan that meets their needs. People without health insurance could access a similar clearinghouse to buy lower-cost private coverage or the new federal insurance option.
There are many different characteristics of the uninsured, so you cannot have a one-size-fits-all plan. That is why President-elect Obama has different aspects to his plan. We will probably see a comprehensive piece of legislation introduced early in 2009 to address several elements of the universal coverage agenda.
Will the newly elected Congress help or hurt President-elect Obama's efforts at health care policy?Because of President-elect Obama's long "coattails," in the House and Senate, they will owe the new president strong support on the key issues. Typically, the first year is the "honeymoon" period in which Congress honors a new president's ideas.
As president, how likely is President-elect Obama to be successful at his biggest health care initiatives? How will the American public know if the policies are successful?When we ask the question about success, we have to introduce the subject of the budget deficit. With the cost of recent initiatives, including the rescue plans and possibly a second economic stimulus package, we have to wonder if these divert funding from a health policy initiative. We must remember that universal coverage is not going to be free. It would be provided through substantial subsidies for the uninsured -- much like subsidies characterize the present SCHIP program. The universal coverage initiative could cost well in excess of $100 billion in new funding per year. We need to recognize that there is a big question mark over all of those elements -- where does the money come from to pay for it? Success could depend on whether or not it is necessary to identify new funding sources. President-elect Obama said one source of funds would be to phase out President Bush's tax cuts for the wealthy. With the current economic slowdown, the Obama administration might decide not to raise taxes for the wealthy if our country is going into a recession. If that is the case, one of the funding sources would not be available. The rescue plan and proposed economic stimulus package will take revenue that could have been used for a health initiative. On the other hand, a universal coverage initiative could be phased in incrementally over time -- easing the short-term funding dilemma.
How will large employers be affected by the Obama administration's health care policy?Many large employers incorrectly conclude that employer mandates won't affect them since they already offer insurance coverage to their workers. However, it will affect them because mandates could specify a certain type of plan design as opposed to simply offering coverage. During one of the presidential debates, Senator Obama asked, "Why shouldn't you have the same type of coverage that members of Congress have?" If that statement evolves into an employer mandate, it will require employers to offer employees "gold-plated" coverage. That might not be a good idea for employers who are competing in a global economy and trying to cost-share health care coverage with employees. If tightly prescribed, therefore, larger employers could face higher health benefits costs.
How will small businesses be affected by the new administration's health care policy?Smaller employers are worried about President-elect Obama's plans, especially the idea of the employer mandate. They oppose government health coverage mandates. President-elect Obama anticipated that and proposed an exemption for small businesses of a certain size and also special tax credits so that small businesses could better afford to provide coverage. Still, small businesses are on a state of alert on how a health plan might impact them. Most new jobs in this country are created by small businesses and we must be cautious about saddling them with much higher costs.
How will President-elect Obama's health policy affect HR professionals?HR professionals are the frontline troops in implementing whatever domestic policies come from the new administration, not just health policy. The country must rely on HR and payroll professionals to make those things happen in the real world of the workplace. HR professionals need to stay informed and be alert to new initiatives -- particularly those that impact their compliance responsibilities. There has been gridlock in Congress on longstanding issues such as health coverage, immigration, family and medical leave expansion, and Social Security. But most likely there now will be a consensus for legislation, particularly with Democrats firmly in control of the White House, the Senate and the House of Representatives for the first time since 1993. HR must be informed and provide input into the process. If there is a new policy, a lot of education will be needed to help policy makers understand the real world implications. HR professionals will need to stay ahead of the curve in many cases regarding policy changes.
What changes to the technology infrastructure do you foresee necessary to implement this administration's health care policies?Most likely, there will be more emphasis on electronic medical records and e-prescribing via email. All of us should have a patient record that we carry with us and take to various physicians. Another important aspect to consider is wellness and preventive care. If we think about health cost management, we need to promote employee wellness and preventive care. Ceridian LifeWorks is at the forefront of providing employee assistance services for health coaching, chronic illness management services, nutrition advice and other aspects of wellness. As we move to a more consumer-directed health system where people manage their health and wellness, we need technology to support the various aspects of preventive care as well as providing more information on health care cost and quality.
What is the effect of the worsening economy on the health care system?We have to consider the issue of rising unemployment, which means losing health care coverage, more people on COBRA if they can afford it, and the impact on earnings. The economic slowdown that appears to be heading our way will increase the number of uninsured Americans and will put more pressure on the new president and Congress to do something. There is also more pressure on employers as they face falling revenues and earnings. As their earnings decrease, they are less able to afford the kind of health insurance packages they would like to provide for their employees. As a result, they could be forced to cut back on levels of coverage and/or increase the costs to their employees. There is no question that a severe recession will exacerbate the health coverage issues President-elect Obama promised to resolve.
With unemployment rising and personal bankruptcies increasing, does it still make sense to shift the burden of health care decisions to the consumer?That is difficult to answer from a national level. Employers are going to continue to shift costs to workers. It is a longer term trend that new plan designs are going to put more financial and decision-making responsibility on employees. If employers are under the recession gun, they cannot provide the same health plans as they did in the past. Deductibles could be higher. The weakening economy will accelerate that trend. As president, will Obama roll back health policies that favor plans such as HSAs (Health Savings Accounts)? I think that is doubtful. You might not see a big expansion of HSAs to make them more attractive, but you probably won't see a rollback either. Too many employers and households are enrolled in HSA-type plans to have Washington, D.C., back peddle on the tax incentives.
With more than 30 years of experience in federal legislative and regulatory affairs, Jim O'Connell focuses on HR and payroll policy issues, keeping customers informed about fast-changing and complex compliance regulations and workforce trends. O'Connell is a frequent participant in national and chapter HR and payroll industry meetings. He is an adjunct professor at Georgetown University in Washington, D.C., and specializes in international business-government relations. O'Connell has been with Ceridian since 1982. Before joining Ceridian, he served in the U.S. Senate as chief legislative assistant to New York Senator Jacob K. Javits and later with Connecticut Senator Lowell P. Weicker. O'Connell holds a Ph.D. in economics from New York's Fordham University.
