04/2001: The Pulse
Small Business Groups Work DC Beat
The National Federation of Independent Business (NFIB) is busy in Washington, supporting association health plans, expanded MSAs, and full deductibility of premiums for the self-employed, according to Al Crenshaw in the Washington Post. NFIB spokesman John Emling is quoted as saying the group would operate as the human resources department for small employers, saving them 30 percent on administrative costs and 13 percent on premiums. On the other hand, Todd McCracken of National Small Business United is less interested in propping up employer-based coverage and more interested in shifting towards individual ownership.
Source.: Washington Post, February 26, 2001
Maine Considers MSAs
The Maine legislature is considering a state MSA law, according to the Portland Press Herald. The article quotes CAHI and NCPA's Jack Strayer in support of the proposal, and John Marvin of the Alliance of Retired Americans as opposing it. The article also notes that "only a handful of MSAs have been set up so far in Maine," but fails to mention the reason may be that few insurance companies want to do business in the state, due to all the other anti-market regulations in effect there.
SourcePortland Press Herald, February 23, 2001. Reporter Roberta Scruggs can be contacted at email@example.com.:
Rhode Island Town Establishes MSAs
While we're in New England, the town of Scituate, Rhode Island is moving ahead with its plan to provide MSAs to all the town employees and allow other residents to enroll in the program, as well. While the program is not eligible for the current HIPAA tax break, the state legislature is looking into providing state tax relief, according to an article in the Providence Journal Bulletin. The town currently spends $8,500 per employee per year on coverage and figures it could spend $7,200 for MSA coverage.
SourceProvidence Journal-Bulletin, February 25, 2001.:
On the Defined Contribution Frontlines
In New Hampshire, the head of the Municipal Association is pretty gung-ho about Defined Contribution. Writing the cover article in Employee Benefits Digest, John Andrews discusses the unique issues involved in applying D-C principles to public employees in partnership with their unions. He believes it can be readily done under current law through the use of a Section 125 plan and a "health trust." He concludes, "(D-C) has possibilities for effecting a sea-change in the labor-management dynamic . . .”
SourceEmployee Benefits Digest, March 2001. I don't think they put articles on their Web site (www.ifebp.org), and there is no e-mail listed for Mr. Andrews.: International Foundation of Employee Benefit Plans,
On the West Coast, Blue Cross of California rolled out a new program called FlexScape, designed to get a jump on the interest in Defined Contribution. One of the offerings will be called "Defined Contribution 100," which will limit employers' monthly contribution to $100 per covered employee. Employees will have to cover any costs over the $100 employer contribution, but they can limit their exposure by choosing a lower-cost health plan. Blue Cross will also set up an "EmployeeElect Plus" program that enables workers to make premium payments on a pre-tax basis.
Source: Blue Cross press release dated February 27, 2001 available on Business Wire, www.businesswire.com, or call Kellie Bernell at 805/557-6755.
You would have to go pretty far to find a more paternalistic employer than Medtronics, yet they are one of the first to embrace defined contribution, according to Patricia Neighmond of NPR's Morning Edition. The Medtronics version includes offering a catastrophic plan with a deductible ranging between $1,000 and $7,000, and a cash account of $2,000 per year. The cash account can roll-over from year to year if it is not consumed, and, according to the story, is popular with employees. Princeton economist Uwe Rienhardt offered a negative take on the plan: "These new defined contribution health plans are little more than devices to shift more and more costs onto employees." Reinhardt must be the only economist in the nation who doesn't realize that health care costs are already paid for by employees as part of a total compensation package.
Aon Consulting's Paul Sullivan has a Defined Contribution article in Compensation & Benefits Management this quarter. The article is a bird's eye view of the issue, discussing the broad trends that are driving the interest and citing a few specific vendors.
Source: Compensation & Benefits Management, Winter 2001 by Aspen Publishers, Inc. Sullivan is based in Newburyport, Massachusetts.
Greg Scandlen is senior fellow in health policy at the National Center for Policy Analysis located in Dallas, Texas. To sign up for his free weekly e-newsletter send an email to: HealthPolicyWeekfirstname.lastname@example.org. Scandlen can be contacted at GMScandlen@aol.com.