OVERVIEW

Adam Thompson — Tue, 15 Jul 2008 12:32:00 -0400

The great majority of employers want to provide health care benefits to employees and their families. Despite a steady decline in the percentage of Americans with employer-based coverage, from 66% of Americans under age 65 in 2000 to 61% in 2004, employers still cover more than 158 million Americans, more than twice the number of Americans who receive Medicaid or Medicare. Because of the financial contributions employers make to health care, ensuring strong employer participation in health care reform is a key priority.

Employer Mandates: As part of comprehensive reforms, Massachusetts, Vermont, and San Francisco require all employers to provide some degree of health coverage for their employees or pay a fee to help finance health care programs. The main goal is to ensure that "low road" employers are not dumping their health care costs onto the public and gaining an unfair competitive advantage against employers who do provide coverage. Despite a precipitous national decline in employer-based coverage and warnings from critics that state-funded programs would "crowd-out" private insurance, Massachusetts has seen a 3% increase in employer-based coverage.

San Francisco's law has the strongest employer mandate, requiring employers with 20 or more employees to provide health care or pay the city $1.17 to $1.76 per hour depending on firm size. Employers have tried to challenge the law in court, but recent court decisions have allowed the city to continue with the mandate during the appeal process. This bodes well for the program and employer mandates elsewhere. Healthy Wisconsin's proposed employer and employee payroll-fee, which replaces monthly premiums, is a form of employer mandate. In many ways, its payroll-fee creates the most equitable approach to employer responsibility, since its sliding scale payment structure is directly proportional to an employer's ability to pay.

Public/Private Partnerships: Many states have developed programs that contract with private carriers and offer coverage to individuals and small businesses. These typically offer insurance-like coverage administered by public and private entities coupled with sliding scale subsidies or premiums available to people with income up to 300% of the poverty line.

Contracting with Insurers: Vermont's Catamount Health Planand Maine's DirigoChoice insurance programcontract with private carriers to offer a comprehensive benefits package with sliding scale premiums or subsidies to people with incomes up to 300% of poverty. In case private carriers do not participate, each stateis authorized to offer the coverage through a public entity. Both programs are available to individuals and small business employees. Maine's program is available to small businesses as long as employers cover 60% of an employee's premium. It is also available to employees eligible for Medicaid and provides a wrap-around benefit to ensure those employees receive the full range of Medicaid services. New Mexico's State Coverage Insurance program offers coverage to individuals and small business employees with incomes up to 200% of the poverty line. Importantly, the program limits total out of pocket costs to 5% of a family's income.
New Regulatory Agencies: Massachusetts' Commonwealth Connector negotiates and contracts with private insurers to bring more affordable insurance options to market for individuals and small businesses. The state created Commonwealth Care, a program offering subsidized coverage toadults with incomes up to 300% of the poverty line and who are not eligible for Medicaid, andCommonwealth Choice, a similar program that offers non-subsidized health plans to individuals, documented immigrants, families, and small businesses. Both Commonwealth programs are administeredby the Connector. As Community Catalyst describes, connectors create a common marketplace for consumers to compare options,and they work best with other insurance reforms like guaranteed issue, community rating, and standardized benefit plans.

Resources:

Families USA and Community Catalyst - A Consumer Guide to State Health Reform: Employer Buy-In Programs

Families USA and Community Catalyst - A Consumer Guide to State Health Reform: Expanding Public Coverage to Non-Medicaid Populations

December 2006 Urban Institute paper - Changes in Employer-Sponsored Health Insurance Sponsorship, Eligibility, and Participation: 2001 to 2005

Commonwealth Fund - Stretching State Health Care Dollars: Building on Employer-Based Coverage

Massachusetts - Commonwealth Connector