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Health Care: First Do No Harm

Editor’s note: this piece stands on its own <>

An opinion piece by

Sean Sullivan, JD

Sean is a Health Care Economist and 20 year veteran of the Washington policy world who has testified before Congress and State Legislatures on Health Care Reform. He was a resident scholar at the American Enterprise Institute for Public Policy Research.


Safeway CEO Steven Burd has grasped the reins of leadership on health care reform like no one else in Corporate America on behalf of the value of employer-based health benefits. Mr. Burd has stepped out in front of his Fortune 100 colleagues and told a largely ignorant and disinterested Congress why employers and market forces hold the key to halting upward-spiraling national health care expenditures and, thereby, enabling affordable coverage of the uninsured with the resulting “real” savings (rather than the illusory savings claimed by the House leadership and the White House but now thoroughly discredited by the Congressional Budget Office).

Mr. Burd has stood up twice to deliver his message on Capitol Hill, and contributed an important Opinion piece to the Wall Street Journal entitled “How Safeway is Cutting Health-Care Costs” (June 12, 2009). He has told his audiences that employer-driven, market-based solutions actually can reduce the national medical bill because that is what Safeway has accomplished with its Healthy Measures program, which emphasizes personal responsibility for healthy behaviors and financial incentives to help get employees to take charge of their health. As this column has argued previously, on this point there should be no dispute the only way to bring medical costs under control in the United States is to improve the health of the population and, thereby, reduce the burden of chronic disease. Americans used to ready access to the best medical treatment will not tolerate the draconian rationing common in government-controlled health care systems, and implicit in the health care legislation being proposed by the Democratic Congress and the Administration.

Safeway’s per capita health care costs have been flat for four years, while costs have increased 38 percent on average for U.S. employers. This and similar stories at companies that are building “cultures of health” as Mr. Burd calls them point the way for the nation to go. Yet, if the current House health bill were to become law, these companies’ ability to control their own destiny not to mention their costs — would be taken away by Congress through the effective repeal of the single most important reason why most of the 62 percent of people under age 65 who get their health coverage through their employment are satisfied with that coverage and don’t want to lose it; this reason is ERISA, or the Employee Retirement Income Security Act of 1974.

ERISA leaves self-insured employer plans like Safeway’s and nearly all other large companies’ free to offer uniform benefits of their own choosing nationwide free of federal and state regulations on covered treatments, rate-setting, and so on. It also leaves them free to design benefits that will help to recruit and retain workers in a competitive labor market. Computer firms and grocery chains have different health insurance needs, and may not want or be able to afford the same levels of benefits.

The House bill would make all ERISA plans subject to government approval by both the Labor Department and a new “Health Choices Commissioner” — after five years, with new federal standards for what is an “acceptable” health plan. If employers failed to meet these still-to-be-defined new standards, they would have to renegotiate thousands of contracts nationwide to meet Washington’s specifications. Safeway’s wellness initiatives, with their incentives and rewards for personal responsibility, are likely early casualties of such a federal regime emphasizing “fairness” rather than personal responsibility. And high-deductible health plans with health savings accounts the basis of new “consumer-directed” health benefits also would be likely victims of a politicized health policy process emphasizing uniformity and “equality.”

Effective repeal of ERISA would remove the solid foundation that supports employer-sponsored health insurance making it impossible for employers to maintain their current coverage. But while the open public debate centers around the cost and impact of a proposed “public-option ” plan to “compete” with private insurance, the “stealth” provision in the House bill to eviscerate ERISA, which also would destroy employer-based benefits, is largely being ignored ( it even includes a new legal right, currently precluded by ERISA, for employees to sue their employer over coverage issues thereby unleashing the tort bar on employers as well as doctors and adding further costs to the health care system!).

The end of ERISA would signal the end of private health insurance in the U.S. and the advent of a government-administered national single-payer regime, as employers would be forced to cash-out their plans and pay a mandated 8 per cent payroll tax which undoubtedly would increase with the increasing cost of a health care system that would have lost its strongest cost control weapon — employers. Anyone who doubts where such a system would be headed need only look at France or Germany, where the combined employer/employee payroll tax to support those countries’ “lower cost” health care systems approaches 20 percent (which, incidentally, invalidates the argument that our current employer-based system creates a competitive cost disadvantage for American companies that is true only for General Motors and a few other companies saddled with absurdly generous and costly benefit plans).

During my 20+ Washington-based years in the health policy arena, we consistently enunciated one simple principle of health reform that needs to be repeated loudly today ERISA is good, and changes to ERISA are bad. We can say that with assurance because it is ERISA-enabled and protected employers that have driven, continue to drive, and will continue to drive real improvement in the health of Americans witness Steven Burd and Safeway. Remove them from the equation except as financiers of socialized payment schemes, and we will end up with the worst of both worlds severely rationed, socialized health care and overtaxed, less competitive companies.

The Hippocratic Oath begins with “first, do no harm;” this also should apply to health care reform!


July 30, 2009 - Posted by | Federal Government, healthcare | , ,

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