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Contact: Stephanie Poe
Tel: +1 202 331 5210

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United States
Washington, DC, 13 December 2007

As the source of health coverage for the majority of working Americans and their families, employers have an enormous stake in the direction and outcome of the health care reform debate raging in the country today. The Clinton administration’s reform efforts in 1993 were criticized for not including employers in the discussion, and most presidential candidates and policymakers are promising not to make the same mistake. This time around, employers’ opinions are likely to matter.

So what do employers think about the various state and Federal reform movements currently underway? To a significant extent, it depends on how big they are. In a major survey conducted this summer by the health and benefit consulting unit of Mercer, a random sample of employer health plan sponsors with 10 or more employees was asked whether they favored or opposed key elements of state health reform laws or proposals, some of which are also being considered for federal action. These included “pay or play” laws (requiring employers to offer a health plan or pay into a fund to provide coverage to the uninsured) and mandating that individuals buy insurance at specified levels of coverage and cost, along with three less sweeping reform initiatives. The lack of consensus revealed by the survey is a good indicator of just how difficult finding a solution continues to be.

The Mercer survey found that the larger the employer, the less likely they were to say they favored any of the reform initiatives – with the exception of individual mandates. Among employers with 20,000 or more employees, only 13 percent approved of “pay or play” reforms, compared to 23 percent of employers with fewer than 500 employees.

The difference in opinion is likely because most large employers are already fully committed to providing coverage but want to retain flexibility and control over the coverage they provide and to avoid the burdens and complications of complying with numerous state mandates. Pay or play reforms could interfere with their ability to offer uniform benefits across all states in which their employees work or reside and open up the possibility of state control over the level of benefits offered.

Small employers, on the other hand, are typically most concerned about the affordability of coverage, and as costs have risen in recent years the percentage providing coverage has fallen. Small employers in favor of pay or play reforms may want the option of state insurance pools for their employees, even though they currently offer a plan.

Employer health plan sponsors in Massachusetts, where a pay or play law has been effective as of October 2006, were somewhat more likely to approve of this type of reform: 30 percent, compared to 23 percent nationally. However, this figure is down significantly from 2006, when Mercer found that 49 percent of sponsors in Massachusetts approved of pay or play. “This may reflect dissatisfaction with tougher-than-expected reporting requirements for all employers, including those opting to ‘play’,” said Blaine Bos, a Mercer worldwide partner and spokesman for the survey.

Large employers expressed greater support for individual mandates: 27 percent of large employers (those with 500 or more employees) and 23 percent of small employers approve or strongly approve. Still, more than two-fifths of large employers say they disapprove (42 percent). “This is somewhat surprising, given that requiring that all individuals to have coverage could relieve existing employer plans of cost shifting from the uninsured,” said Mr. Bos.

The Mercer survey also asked whether employers felt state health reform should be encouraged as a way to test approaches to achieving universal coverage. The largest employers, which tend to have employees in many different states, were the most strongly opposed because many state reform initiatives call for waiving ERISA preemption, which would subject even self-funded employer plans to state regulation rather than federal regulation as they are currently. Among employers with 20,000 or more employees, just 8 percent said they approved, while 65 percent said they disapproved. Small employers look much more favorably upon state reform efforts; 42 percent believe they should be encouraged, while just 33 percent are opposed.

NBGH members elaborate

Mercer and the National Business Group on Health (NBGH) collaborated on a survey of the NBGH membership to ask more detailed questions of these typically very large, well-informed employer health plan sponsors. Fifty NBGH member companies responded to the survey. These results, while not representative of all US employers, provide a useful perspective on how this influential group of employers views current reform approaches.

A large majority of the NBGH respondents (80 percent) believes that employers should continue to have responsibility for providing health coverage to their employees, and of those, half believe it should be a requirement. They were strongly in favor of the individual mandate, with 81 percent agreeing that individuals not covered through an employer or government plan should be required to purchase coverage on their own. However, less than one-fifth of the NBGH members responding to the survey believe that employer and market actions alone could mitigate the need for government-led reform within the next five years.

Only about a fifth of the NBGH respondents (22 percent) believe that achieving universal access should be one of the primary goals of government-led health reform. Rather, these employers believe the government should focus on improving the efficiency of health care delivery (73 percent) and the quality of health care (67 percent), and on lowering or stabilizing health care cost growth (43 percent).

“If we are going to get anywhere, we as a nation need to simultaneously improve the quality and safety of health care and reduce or eliminate cost drivers. At the same time, we need to expand access to affordable, effective and efficient care,” said Helen Darling, NBGH president.

Three-fifths of the NBGH respondents say they would continue to play a role in ensuring employee health even if the US adopted a single-payer system with universal access, either by providing supplemental coverage to ensure employees received the same level of coverage currently provided (23 percent) or by providing specific health management services designed to improve workforce health and productivity (60 percent).

About Mercer

Mercer is a leading global provider of consulting, outsourcing and investment services. Mercer works with clients to solve their most complex benefit and human capital issues, designing and helping manage health, retirement and other benefits. It is a leader in benefit outsourcing. Mercer’s investment services include investment consulting and multi-manager investment management. Mercer’s 17,000 employees are based in more than 40 countries. The company is a wholly owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York, Chicago and London stock exchanges. For more information, visit www.mercer.com.

About the National Business Group on Health

The National Business Group on Health is the nation’s only non-profit, membership organization of large employers devoted exclusively to finding innovative and forward-thinking solutions to their most important health care and related benefits issues. The Business Group identifies and shares best practices in health benefits, disability, health and productivity, related paid time off and work/life balance issues. Business Group members provide health coverage for more than 50 million U.S. workers, retirees and their families. For more information about the Business Group, visit www.businessgrouphealth.org.

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Contact: Stephanie Poe
Tel: +1 202 331 5210