Here is a recent article I found that may prove very helpfull to those interested in insurance.

For employers, there's no exit from health care

Ken Terry
Tuesday, July 10, 2007

While most large corporations still offer health insurance to their employees, the rapid growth of health costs is reducing their profitability and their ability to compete internationally. So some big companies want out. But they fear that if the government takes over health care -- a likely outcome if employers stampede for the exits -- they'll be subjected to onerous mandates or tax increases. So they're unalterably opposed to the kind of single-payer system that one California Senate bill would create. And they're just as likely to fight the new Democratic Senate/Assembly measure that would require employers to cover their workers or pay 7.5 percent of their payrolls into an insurance fund. The California Chamber of Commerce -- which takes a dim view of Gov. Arnold Schwarzenegger's health reform plan, as well -- strongly opposed an employer mandate two years ago, and the chamber led the successful effort to repeal the law that imposed it.

What U.S. corporations really want to do, as shown by a recent proposal from the ERISA Industry Committee (ERIC), a lobbying group for big, self-insured companies, is to limit their health care liabilities without dropping their benefits. ERIC would replace the current health insurance system, in which large employers pay medical bills themselves, with one in which competing regional "benefit administrators" would assume insurance risk for all individuals not covered by Medicare, Medicaid, other government programs, or non-participating firms. Every individual would be required to buy insurance from one of the local benefit administrators, which could be insurance companies, investment firms, banks, or other parties. Each benefit administrator would offer several health plans. An employer could pay the benefit administrators whatever it wanted to help cover its workers, or give each employee a voucher for that amount, and the employee would have to pay the rest. Thus, the company would have a fixed insurance premium and would no longer be responsible for health care costs.

Another example of this "defined-contribution" approach is the contract that Goodyear Tire & Rubber Co. signed with the United Steelworkers Union last December after a two-month strike. Under the terms of the pact, Goodyear will transfer all union retiree health-care obligations to a trust fund under USW management. In effect, the union agreed to take on $1.2 billion (and perhaps more) in future health-care costs in return for $1 billion in cash and stock from Goodyear. GM, Ford and Chrysler's new owner, the Cerberus private equity firm, reportedly want to buy out their retiree health care commitments by making similar deals with the United Auto Workers.

In less unionized fields, big employers are taking a different tack: They're passing on more costs to employees and rolling out "consumer-driven plans." Critics have assailed these plans as tax shelters for the healthy and affluent; they've also pointed out that the incentives they give consumers to spend less on health care often result in the avoidance of necessary care. What's less often noted is that, like the Goodyear deal and the ERIC proposal, consumer-driven plans are designed to help employers curb their health costs. Companies contribute a set amount to health savings accounts, and there's no requirement for them to raise their contributions over time. So even if the deductible in the associated high-deductible policy keeps getting larger, it's the worker, not the company, who will be on the hook for the difference between the deductible and what's in his or her HSA.

There are many drawbacks to the employer-based system. As economists Alain Enthoven and Victor Fuchs note in a 2006 paper, it creates high administrative costs, limits wage increases, leaves many people without insurance and leads to "job lock." The ERISA Industry Committee seeks to alleviate some of these problems: for example, its approach would make insurance portable, reduce administrative costs and help self-employed people get coverage. On the other hand, many employees might discover they could no longer afford coverage comparable to what they have now.

Wherever our health care system is heading, Americans should demand that employers pay their fair share for health care. The government-run and -managed health systems of Europe, Canada and Japan require employers to ante up; and if the United States decides to switch to a single-payer system, in which the government pays all of the bills, the same will be true here. Employers, as well as individuals, must make health-care contributions in proportion to their means. Only by sharing the pain can we start to build a better health care system.

Ken Terry, a senior editor at Medical Economics Magazine, is the author of "Rx For Health Care Reform," which will be published in September by Vanderbilt University Press.

This article appeared on page C - 11 of the San Francisco Chronicle