Increases in Premiums ‘Threaten’ Employer-Based Health Care System, USA Today Editorial States

Employers offering their workers health care should start viewing such benefits as they do 401(k) plans, a USA Today editorial suggests. The editorial says that instead of backing out of the health benefits market because of rising costs, employers should "manage the choice of plans available, negotiate group rates and standards for their employees and provide enough cash to buy at least one basic plan that meets most workers' needs, taking rising costs into account." The federal government manages health benefits for federal workers in this manner. In addition, companies like Medtronic and Motorola offer "defined contribution" plans in which they give workers a certain amount of money to spend on health coverage. Employees are responsible for picking out the plan that best suits them. The editorial says that such a system is good for companies because they can "limit their own spending and make costs more predictable." Workers also can benefit from "a wider range of choices, greater freedom to make their own health care decisions and a more powerful incentive to be prudent shoppers." However, the editorial notes that "[l]ess responsible employers" might be "tempted to take a shortcut that leaves their workers as vulnerable as the unemployed." The "difference lies in whether employers use their size to negotiate good terms for their employees, or whether they just dole out a few dollars and wash their hands of the problem," the editorial states. The editorial also suggests that Congress "needs to think about the best ways to protect patients ... in a more consumer-driven marketplace." The editorial concludes, "Without some forward thinking ... the country will find itself back where it was 10 years ago -- saddled with skyrocketing costs, yet with fewer options left to fix them" (USA Today, 9/4).

Improve Current System
In an "opposing view" published below the paper's editorial, Donald Young, interim president of the Health Insurance Association of America, writes that as it stands, the employment-based health system has "inherent advantages," and efforts to expand health insurance coverage "should supplement and strengthen the current ... system, not replace it." He notes that even though the country is experiencing a rise in health costs, the employment-based system "continues to serve millions of Americans very well." Further, the cost increases are not "intrinsic[ally]" related to the employment-based system. In fact, he says that employers had a "major role in stemming the rapid rise in health care costs in the late 1980s" and in "ensuring the quality of health care purchased on behalf of their employees." Young says that three factors are responsible for the rise in health care premiums: state-mandated benefits, prescription drugs and new technology. Specifically, state-mandated benefits, which occur when a state passes a law requiring certain coverage, have raised premiums by about 13%, Young says. In addition, Young states that prescription drug spending "outpaces all other major categories of health expenses," and spending on new technology could account for up to one-third of increased spending over the next five years. Young concludes that the employment-based health system has "helped control health care costs, helped improve the quality of care and maximized health benefits for a wide range of Americans" (Young, USA Today, 9/4).