2009-05-06
On April 29, 2009, the House Ways and Means Committee held the fourth hearing in a series of health care reform hearings entitled, "Health Reform in the 21st Century: Employer-Sponsored Insurance."

Chairman Charles B. Rangel (D-NY) opened the hearing by stating that he would like to strengthen employer-sponsored insurance (ESI), rein in rising health care costs to make coverage more affordable, consider a public health insurance option, and ensure that private insurance accepts high-risk patients. Overall, the hearing was partisan, with Democrats using their witnesses to emphasize the value of a government-run plan, and Republicans asking their witnesses to share the potential harm to ESI with the enactment of a government-run plan. Six witnesses testified, and several witnesses indicated that taxing employer-sponsored health insurance would destabilize the system.

Key witnesses included Elise Gould, Ph.D., M.P., Aff., director of Health Policy Research at the Economic Policy Institute, who indicated that ESI should be strengthened, as employers use it as a way to attract and retain workers, and advocated a health insurance exchange that includes a public plan option for those who do not have access to ESI. Ms. Gould also indicated during the question and answer session that automatic enrollment in private plans, with an option to opt out if an individual already has coverage, would be a good idea.

J. Randall MacDonald, senior vice president of human resources at IBM Corp., testified regarding IBM's wellness and prevention initiatives, which have led to a healthier workforce and have provided a positive return on investment for the company — IBM's investment of $81 million has resulted in a savings of $200 million. In addition, Mr. MacDonald advocated broad systemic reform centered on patient care, with a primary care physician as a "quarterback" to coordinate care, while preserving a voluntary employer-based system and investing more in wellness, health information technology (HIT), and initiatives to reduce health care costs. Mr. MacDonald also stated that employer-sponsored insurance should be the foundation of change and the engine of innovation in wellness and prevention. He commented that even with the creation of a public plan, employers that can afford to do so will likely continue to provide private insurance and other health programs to employees.

John Sheils, senior vice president at The Lewin Group, provided results from the group's research, which showed that an introduction of a lower-cost public plan would decrease the number of uninsured in the U.S. by 28 million people (out of the 47 million currently uninsured). However, the public plan, if set up at Medicare payment levels, would also decrease participation in private insurance by approximately 70%. The research notes that as payment levels approach private payer levels, the shift from private to public insurance would lessen. Family coverage under a public plan would be approximately $200 less per family. However, Mr. Sheils notes that there would be a cost-shift of approximately $526 per privately insured individual if Medicare payment rates are used and all employers have the option to enroll their workers in a public plan. During the question and answer session, Mr. Sheils noted that the introduction of a public plan might spur private plans to become more competitive and cost-effective; however, most private plans would not be able to survive. He believes employers would be at a competitive disadvantage to provide private health insurance.

Denny Dennis, senior research fellow, NFIB Research Foundation, testified that employer-mandated insurance would be bad for the economy, small business, and low-income individuals. Mr. Dennis stressed that the major problem with the health care system is costs, which need to be addressed before coverage expansion.

Gerald Shea, special assistant to the president at AFL-CIO, testified that union workers value their health care benefits and have often traded wages for assurance in maintaining these benefits. In order to preserve ESI, Mr. Shea stressed that the health care system needs to have higher quality and be more efficient in order to control costs. He also said that if a public plan option is introduced, then the government needs to maintain the "rules of the road" for everyone involved.

Kelly Conklin, owner of a small cabinet-making business in New Jersey, provided his experiences with the high premium costs he incurs for providing health insurance to his 13 employees.

Representative Wally Herger (R-CA) also mentioned that Ken Sperling (from Hewitt) testified at last week's hearing on behalf of the National Coalition on Benefits (NCB) and that Chairman Rangel inquired about NCB's position on a government-run plan. Rep. Herger explained that since last week's hearing, NCB submitted a letter to the committee on its position, and he requested that the letter be admitted into the record. Chairman Rangel approved the request.

Click here to read a full summary of Ken Sperling's testimony from last week's hearing.

Full Text of Witness Testimony

Witnesses' written testimonies from the committee's hearing on employer-sponsored insurance are available at the Ways and Means Committee Web site.

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