How Policymakers Are Transforming Benefits

The Affordable Care Act. Health-reimbursement arrangements. Student-loan-repayment programs.

These were just a few of the many topics American Benefits Council President James Klein touched on last week during his Health & Benefits Leadership Conference keynote titled “Rethinking Employee Benefits Public Policy: Short-Term and Long-Term,” which parodied the television game show Jeopardy.

Selecting answers (remember, Jeopardy requires the contestants to offer up questions that are associated with particular answers) from categories such as Shakespeare Quotations, Playing the “Part”, Beatles Songs, Primary Colors and States of Confusion, Klein recapped some of the more significant developments happening inside the Beltway that could profoundly impact employer policies and programs.

It didn’t take Klein long to get to the Affordable Care Act and healthcare reform.

Klein began his presentation by touching on how all 20 Democratic Party presidential candidates have made healthcare a campaign priority. “They saw how that issue worked in the last election,” he said. “Short-term, their theme is, ‘We need to protect the Affordable Care Act’; but longer term, all of them, to one extent or the other, are talking about a larger role for the federal government to play.

“Almost none of them have really said very much at all about what the future role of employers would be in terms of this expanded role for the federal government, and none of them have touched the red-hot issue of how they might change the tax treatment of employer-sponsored healthcare coverage. So, stay tuned on that.”

On the issue of healthcare costs, Klein said that, while bipartisanship may be rare, it can be seen on occasion. While Sens. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.) may not be “kissing one another,” they have announced they are going to work together to address healthcare costs and have reached out to various stakeholders to ask for suggestions. “They are making this the focus of this year’s and next year’s Congress.”

Meanwhile, most of the Democrats running for president have all been talking up a single-payer solution, otherwise known as “Medicare for All.”

While they know this won’t ever get through the Senate and be signed into law by the current president, Klein said, they see it as a way to set the stage were the Democrats to capture both the Senate and White House in 2020.

The danger, he adds, is it also “potentially hands a great campaign issue to the Republicans, who are chomping at the bit to be able to say, ‘Oh look, oh look. They [the Democrats] are trying to turn your healthcare coverage over to the federal government.’ It’s a very delicate path that they have to navigate.”

It would be a mistake, Klein said, to think there’s just one version of single-payer or Medicare for All. “There are a lot of different approaches to this, some of which actually include the continuation of the employer-sponsored system operating side by side with an expanded Medicare system … .”

Klein suggested that employers should also keep their eyes on Health Reimbursement Arrangements. To me, he said, “this may be the biggest game changer that we will see in the whole arena of the provision of healthcare coverage in this country.”

The proposed changes, Klein said, would enable employers to make contributions to HRAs on a tax-favored basis and permit their employees to buy whatever plan they would like with the money that they’re given. Were this to catch on, he added, it would do for healthcare what 401(k)s did for the retirement system.

“The attractiveness of this concept will depend in large degree to the extent to which employers are confident that their employees will be able to find good-quality coverage at affordable prices in the individual marketplace,” Klein said. (Final rules should be out in the next couple of months and will likely include “guardrails” against employer misuse, he added.)

At the same time, Klein said, employers are going to want to keep an eye on developments in student-loan-payments support.

“This is sort of the shiny new thing, I think, in the world of benefits that we’re hearing so much about as we travel around the country and talk to employers of all sizes,” he said.  “The notion here is to allow individuals to come to their employer and say, ‘Look, I’m paying off $1,000 a month of this enormous student loan that I have.’ You can match that money or, up to a certain level, match that money into the 401(k) plan.”

Given the magnitude of the student-loan-debt problem, Klein suggests more proposals along these lines could follow in the coming months.

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