Why employers are flirting with the public option

A third of the 90 member companies the National Alliance of Healthcare Purchaser Coalitions surveyed in December said a public option would be helpful, while one quarter criticized the idea. Some 72 percent favored government regulation of hospital prices.

The Business Group on Health, a powerhouse benefits group lobby representing drugmakers, insurers and hospital systems, also is warming to a different sort of government-led health expansion: More than half of members surveyed last year support the government lowering Medicare eligibility as low as age 50. The group didn’t ask about a public option.

“It’s a big shift,” said longtime Democratic pollster and strategist Celinda Lake. “Many businesses at this point just want out of the health care business, and they would love to take a lump sum of what they’re contributing, give it to someone else and let them worry about it.”

At Friday night’s Democratic debate in New Hampshire, where candidates again sparred over health care, public option proponents emphasized their plans would lower costs without upending the system.

“There’s a majority ready to act to make sure there’s no such thing as an uninsured American and no such thing as an unaffordable prescription just so long as we don’t command people to accept a public plan if they don’t want to,” said Pete Buttigieg.

Big employers still don’t embrace the Medicare for All approach championed by Bernie Sanders (I-Vt.) and others on the Democratic left. But they are no longer monolithically opposed to an in-between step where they don’t have to fight with the health industry and workers get an affordable alternative.

The change is driven by business frustration that insurers haven’t been able to curb costs and instead allowed hospitals and doctors to profit at employers’ expense. Relieved of the financial and administrative burden of providing worker health care, employers could offer other perks to attract talent in a tight job market.

“Everybody’s doing too damn well while we’re paying the damn bill,” said Mike Thompson, CEO of the National Alliance of Healthcare Purchaser Coalitions, referring to the health sector. His coalition’s member companies represent 45 million commercially insured workers.

Given the financial strain on both employers and workers, Thompson said, “I don’t think government action is the first choice, but it may be our only remaining choice.”

Lake said these trends give Democrats a chance to build on what polls show is their advantage over Republicans on health care — and brand it into an economic reform.

“Health care is such a good issue for us, but sometimes Democrats don’t talk about it big enough,” she said. “We’re underestimating how much we can bring in the employer voice, and I think if we do, that we have an economic argument as well as a health care argument — and we desperately need an economic argument.”

Rep. Debbie Dingell (D-Mich.) said it’s paramount to have a discussion about affordable coverage for everyone in her car-building district, where “the cost of health care was more expensive per automobile than steel was.”

“If you talk to small businesses, the biggest cost is health care, and we have to figure out how to get together and make it affordable for everyone,” she added.

There’s still plenty of wariness about overhauling the coverage of the approximately 157 million Americans in employer-sponsored plans, who comprise more than half of the U.S. population. Polling shows an overwhelming majority like their employer-sponsored insurance — although Lake notes much of the appeal is that employers foot most of the bill.

Democrats also haven’t elaborated on the ways a public option might affect the hefty break employers get for covering their workers.

Still, employers say something has to give in the face of a cost crisis that’s intensifying and hitting patients too with higher deductibles and co-pays. The Kaiser Family Foundation last fall reported that for the first time annual premiums for a typical workplace insurance plan for families passed $20,000, up from around $13,000 a decade earlier. And nationally, health spending has hit $3.6 trillion a year, according to federal projections.

The willingness to consider the public option comes as employers’ historically close lobbying alliance with the health insurance industry has frayed over issues like the Trump administration’s push to publicize the secret rates hospitals and insurers negotiate. Employers are pushing for more transparency while hospitals and insurers fight the effort as a threat to their business.

But the shift on a public option would be an even more significant break. When Congress wrangled over Obamacare a decade ago, employers warned a public option would kill the private insurance market because the government-backed plan could play by different rules — say, by offloading bureaucratic costs to the government and securing bailouts if needed. Even after those arguments carried the day and the public option was dropped, there were predictions that tens of millions of workers would lose coverage because of the health law and its new markets.

Today, the uninsured population is lower, undermining hospitals’ arguments that rising health costs are a necessity to offset the expense of taking care of people without coverage.

“It demonstrates that the provider community is pushing payers toward government solutions,” said James Gelfand of the ERISA Industry Committee, who was a top lobbyist for the U.S. Chamber of Commerce during the Obamacare wars and successfully fought against the inclusion of a public option.

The corporate dissatisfaction echoes arguments from Medicare for All backers, who blame health industry profiteering and waste in the existing system for warping market forces in a way that demands government intervention. About 68 percent of Americans support the public option, according to the Kaiser Family Foundation’s latest health tracking poll.

“I still can’t believe that we in our democracy allow [the health care industry] to have the power at the table that they have,” said Dan Wolf, the founder and CEO of Cape Air, a regional airline whose average annual spending on individual employee health plans has spiked from $1,200 to $8,000 per year.

Wolf, a former Massachusetts state senator who supports Medicare for All, attributed employers’ shifting viewpoints less to a “change of heart” about people’s right to health care than to the “raw economics” of an exorbitantly expensive system.

Frustrations with cost reverberate across the board, among representatives of multinational energy firms, banks, universities and technology firms. Also factoring into the debate are smaller companies, family businesses and entrepreneurs who increasingly have to drop insurance benefits due to the costs of the small group and individual markets of Obamacare.

Spending on health care by private business is growing faster than for government programs like Medicare and Medicaid. The growth rate hit an all-time high in 2018 according to the latest government data, when overall costs spiked to nearly $727 billion, up from $684 billion the previous year. About $560 billion of business spending went into insurance premiums, which have risen by nearly a third from 2010.

Small businesses have a much harder time absorbing these costs: In 2004, 42 percent of the National Federation of Independent Business’ members offered coverage. By 2016 that had shrunk to just 29 percent.

But few proponents of the public option have tied it to employers’ cost crunch — something Dingell finds frustrating.

“The presidential candidates have so screwed up the discussion on health care,” Dingell said. “And people don’t understand the issues we’re talking about, and we have to take a big breath and talk about getting people everyone affordable health care.”

Business leaders say the onus is on employers, who cover 55 percent of the population and need to get politicians’ focus off public programs like Medicaid and Medicare.

“They need to step up their game before they’re no longer in the game,” said Chris Skisak, executive director of the Houston Business Coalition.