Board Policy
Healthcare
June 2006
The Illinois Chamber’s Health Care Council brings together diverse sectors of the Illinois business community in an effort to find solutions and help shape public policy on one of the State’s most complex and pressing issues – healthcare. This policy statement incorporates the diverse perspectives of employers, health care providers and insurers. Each has a role to play in the development and maintenance of a successful healthcare benefit system that is equitable and accessible.
Overview:
Illinois employers spend approximately $25 billion annually for health care benefits. In comparison, Illinois workers' compensation costs and unemployment insurance costs combined are approximately $4 billion.
While the cost of health care is important, employers and consumers must be able to expect quality health care from medical providers and their health plans. Healthy employees are productive employees. With quality and efficiency improvements, Illinois will be better postured to increase access to health care coverage. Without such improvements, the number of uninsured will increase and Illinois will be a decreasingly attractive state for businesses to locate.
For decades, health care costs have been rapidly increasing at double digit rates often far exceeding the consumer price index. Without significant changes, the dramatic increase in health care benefit costs, experienced by employers does not appear to be slowing down anytime soon. In response, employers have sought aggressive and innovative ways to control health care benefit costs. Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), Preferred Benefit Managers (PBMs), utilization review systems were the some of the first responses. Consumer-driven insurance products with Health Savings Accounts (HSAs) and Health Retirement Accounts (HRAs) are more recent tools that employers also are utilizing.
Today, in virtually every employer plan an employee must share in the cost of their health plan in the form of co-payments, co-insurance and deductibles. Consequently, cost increases are affecting patients as well as purchasers.
Finally, decisions of state policy-makers have a direct impact on health benefit costs. For example, Illinois hospitals accrue over $1.2 billion in uncompensated care costs and losses on caring for Medicaid patients. In order to maintain financial viability, hospitals must shift these costs to the insured population, which in turn leads to inflated and rising health benefit costs for employers.
We believe the following issues are causes for higher health care benefit costs:
- A lack of historical focus on or rewards for quality and efficiency.
- Patients have had little information or incentive to consider quality or efficiency when making health care decisions.
- The health care system is years behind other disciplines and institutions in implementing health information technology.
- Costs for many prescription drugs, medical devices and medical equipment have accelerated.
- Our population is aging with an increased percentage of our citizens moving into higher health cost years.
- State government’s failure to pay for the full costs of care for Medicaid patients, as well as the uninsured, has resulted in dramatic costs shifts to the insured population. This creates a vicious cycle of rapidly rising health benefit costs, leading to employers/ employees dropping coverage, which in turn leads to higher uninsured and uncompensated provider costs that are shifted to an ever-shrinking insured population.
Effective reform will require finding a balance between reasonable costs, maintaining access to care, and a commitment to quality and efficiency. This can only be achieved with a system that provides appropriate incentives for providers to improve quality and efficiency; empowers consumers to take personal responsibility for the health care services they want and need; and requires both public and private purchasers of care to reimburse providers adequately and equitably.
Strategy for the Future: Re-engineering Our Health Care System
The following are broad-based principles to improve our health care system:
Implement measurement, transparency and disclosure of provider and health plan performance using nationally accepted standards that assist consumers to be better consumers of health care services and hospitals and providers to improve their performance: Illinoisans should be able to select hospitals, physicians, physician groups, treatments and health benefit plans based on public reporting of nationally standardized measures for quality, consumer experience, equity and efficiency.
Move in larger rather than incremental steps toward consumerism: Consumer-driven health care is much more than merely raising deductibles and co-payments. Consumers of health services must have the necessary information that allows them to make informed decisions that lead to the rational and efficient use of their health care benefits and dollars. Consumers are able to readily obtain information and data that compares many of the products and services they purchase. Uniform measures used for reporting must be approved by a consensus of provider, hospital, researcher, patient and purchaser stakeholders with implementation by health plans and other delivery systems on a nationwide basis.
Introduce payment of providers based on performance: Payment for health care must in the future emphasize improved outcomes, processes and structural changes that enhance the quality, safety and efficiency of the care. The development and implementation of incentives or pay-for-performance programs is on the rise, stimulated by reports from the Institute of Medicine and leadership demonstrated by organizations such as the Leapfrog Group. Pioneering efforts around pay-for-performance are now emerging from Bridges to Excellence (BTE), the Integrated Healthcare Association (IHA), the Centers for Medicare and Medicaid Services (CMS), as well as several other programs initiated by both payers and purchasers. Pay-for-performance systems provide higher reimbursement for those who perform well on a wide variety of quality, cost and efficiency measures (which are both process and outcome-oriented). Implementation of pay-for-performance programs must be undertaken with special care to ensure that the already fragile health care safety net is not damaged. In addition, implementation must ensure that accurate, reliable and valid measures are used.
Use health information technology to help drive savings and improve quality: We are at a unique point in time, where public and private sector interests are at an all-time high in two key areas: improving the quality and safety of healthcare and moving forward on a health information technology agenda. Approaching these two key issue areas independently-- without strong integration across both areas--will result in missed opportunities, unintended consequences, and possibly reduced impact in both areas. An integrated, incremental strategy, which incorporates goals related to quality, safety, and efficiency as well as health information technology and the interoperability of data across organizations, offers the foundation for building a healthcare system that is safer, of higher quality, and more effective and efficient.
Focus on “healthy people”: Wellness equals long-term management of health care costs. Public pay and private health plans must encourage employee wellness. Resources and strategies to support a “wellness culture” must be utilized on a consistent basis.
Collaborate with government to implement strategies in public and private programs: The Council believes that public and private sector leaders within our state must engage multiple stakeholders including state and local policy officials, as well as healthcare providers, consumer and business leaders, to develop shared principles, priorities, strategies and plans for improving health and healthcare in Illinois. The Council provides a forum to advance collaborative efforts between the private and public sector.
Health Care Council Policy Positions:
- The Council strongly supports protections offered to employer ERISA plans. Employers must be allowed to operate in a uniform multi-state environment which is critical to employers operating in multiple states. Penalties or disincentives should not be imposed on employers that chose to self-insure. Innovation in benefit design and cost containment should be encouraged.
- The Council strongly believes that efforts to mandate a specific coverage or attempts to dictate policy provisions within an employer's healthcare plan reduce employer health benefit plan flexibility and innovation and increase the costs of health insurance to employers and their employees. Mandates increase health benefit costs causing more individuals to lose coverage all together or see their health care benefits reduced.
- The Council will work to preserve the ability of employers to contract with health care insurers and providers in an environment that is not burdened with government intervention and provides flexibility for regulated insurance plans and providers to meet the needs of the consumer. Legislation that seeks to unreasonably protect income or profits by reducing competition in health care at the expense of employers and their employees will be opposed. Proposals such as anti-trust exemptions for price-fixing and contract regulation that impairs the ability of employers to use networks and fairly and effectively establish and maintain relationships with providers in a cost-efficient manner are counter productive.
- State government must become a good partner in healthcare purchases. Appropriate funding of a reformed Medicaid system will reduce the cost-shifting to private employer health insurance plans. The Council supports efforts to reform Medicaid to improve quality and efficiency, incentivize provider performance, reduce inappropriate bureaucracy placed upon health care providers and install reimbursement structures that reflect what the actual cost of delivering health care services, as paid by private employers. Appropriate funding of a reformed Medicaid system will reduce the cost-shifting to private employer health insurance plans.
- With a fundamental belief that private enterprise initiatives result in maximum quality and efficiency, the Council will work with Illinois policymakers to identify private sector, rather than government controlled or mandated, opportunities to cover the uninsured in a manner that does not shift costs disproportionately to employers already providing coverage. The Council supports the development of public/private healthcare partnerships between providers, insurers, government and employers to demonstrate innovate ways to help employers to provide and maintain health care benefits to their employees.
- With a focus on quality and efficiency, the Council will assist regulators in the implementation of recently enacted legislation that:
- provides greater public access to information regarding the quality and cost of hospital inpatient and outpatient services (PA 94-27);
- places limits on non-economic damages for medical awards and other medical liability reform provisions (PA 94-677). In addition, innovation and research and development in medical products must be encouraged through reforms of product liability laws; and
- requires civil restitution of health care expenditures obtained by fraud (PA 94-577).
- The Council believes efforts to expand health care liability for employers referred to as "enterprise liability" merely shifts liability to an "enterprise" like an employer or health plan allegedly connected with a cause of action. These proposals increase litigation, increase health care costs and are counterproductive to achieving a more efficient and effective health care system.
- The Council supports tax incentives that encourage employers to maintain and provide health care benefits to their employees and dependents.
- The Council supports federal and State funding of technology advancements, which result in quality and efficiency improvements. We support the development of technological guidelines, consistent with national standards to ensure that all changes are compatible for medical providers, insurers, and businesses nationwide, including organizations which are located in multiple states.
- The Council supports legislation that allows individuals, employers, and other purchasers of health insurance coverage in this state to have the opportunity to choose health insurance plans that are more affordable and flexible than existing policies offering accident and health insurance coverage. Called “Consumer Choice of Health Benefits Insurance Plans”, these insurance products seek to increase the availability of health insurance coverage by allowing insurers authorized to engage in the business of insurance in this state to issue accident and health policies that, in whole or in part, do not offer or provide state-mandated health benefits. Purchasers of such policies must be advised in writing that the policy may not cover some or all of the state-mandated health benefits and in writing acknowledge their understanding that such policies offer limited coverage.
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