Health Reform WK-EDGE Pandemic created uncertain future for employer-provided benefits programs, experts say
Monday, July 20, 2020

Pandemic created uncertain future for employer-provided benefits programs, experts say

By Pension and Benefits Editorial Staff

Before the pandemic, most employers expected to provide health care benefits to employees over the next five years. Since COVID-19, the future of employer-provided benefits programs is uncertain, according to experts at a recent Employee Benefit Research Institute (EBRI) webinar.

“The obvious question to me is: Will employers drop coverage because of COVID-19?” said Paul Fronstin, director of EBRI’s health research and education program. “Am I predicting that employers will drop coverage? Absolutely not. In fact, most employers have not talked about cutting or dropping health benefits at all since mid-March because health care is too emotionally charged right now to be on the table.”

He noted that now might be the time for provider payment reform, prescription pricing, and revisiting other purchasing strategies. “However, there is no urgency to reevaluate benefit design. Employers are still in crisis management mode, and not yet thinking about the long-term,” Fronstin said. “And, even with high unemployment, health benefits are still viewed as a recruitment and retention tool.”

In March, the uncertainty surrounded what the pandemic would mean from a cost perspective and how employers would handle health care benefits for workers being laid off and furloughed. “Now, the uncertainty isn’t if employers will continue to offer benefits, it is about what benefits companies will be offering, if they will be the same benefits, and if employees will still value the benefits packages they had before the pandemic,” said Heather Meade, principal, Washington Council, Ernst & Young.

Meade commented that in the ongoing discussion of the best ways to provide health benefits during the pandemic, employer-provided coverage has been low on the list. “There were two diverse responses to providing health coverage, and neither one of the sides was advocating for employer-provided coverage as the solution,” she said. “I think it’s something important for employers to think about.”

Individuals on the left side of the political spectrum took the pandemic as an opportunity to support Medicare-for-all, while those on the right recommended moving everyone into the individual market and providing them with “pandemic accounts,” which would work like health savings accounts. “Both sides of the political spectrum moved away from employer-provided coverage as a policy solution for providing coverage to Americans,” she said.

Many companies and advocacy groups still believe that employer-provided health care is the best way to provide coverage to Americans, Meade noted. One way to keep employer-provided coverage as a viable option would be for Congress to provide substantial subsidies for COBRA coverage. Meade said that a May poll showed that 78 percent of voters support the government providing funding for COBRA continuation coverage to help people who have lost their jobs or been furloughed to remain on their employer-provided health plan. She said that there is strong bipartisan support for this plan.

“COBRA is a really imperfect tool,” she commented. “But, one of the benefits of COBRA is that Congress knows how to do it. There is a pattern for subsidizing COBRA, which makes it more doable than implementing a whole new system, whether it be letting all Americans enroll in Medicare, or whether that means implementing pandemic accounts. It would be really difficult to implement an entire new health care system in the middle of a pandemic.”

SOURCE: EBRI webinar, Coming out the Other Side of COVID-19: The Future of the Employer-Based Health Care System, July 1, 2020.

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