By SPBA Active Past President Fred Hunt – September 8, 2015
As a starting basis, it is important to remember that employee benefits are a political orphan. Neither party nor left nor right are a natural enemy or friend of employee benefits. The good news is that we are not automatically on anyone’s political hit list. The bad news is that we have no natural reliable defenders. However, health benefits are the fattest and most tempting of fat cats in the eyes of all politicians because the tax treatment is, by far, the largest “revenue loss” (money escaping taxation) in the US budget. That is why we keep telling you that YOU need to shape public opinion in your communities (which is the true basis of political opinion).
Looking at past Presidents: SPBA has had opportunities for close insider interaction with 7 Presidents. Their views on employee benefits and the impact they had is very different from what conventional wisdom and “history” assumes.
Gerald Ford took office under the cloud of the Nixon resignation and pardon. As he told his close Congressional colleagues, he needed to sign something quickly to bring the nation together. What we now know as ERISA had been percolating in Congress for 10 years as truly bi-partisan legislation. It got rushed into law and a White House signing made the public feel better and looking forward (though the employer/insurer benefits community dubbed such strict fiduciary duty, limitations and reporting was Every Ridiculous Idea Since Adam which would kill current plans and prevent any new plans from every being created).
An interesting trend was set. SPBA, itself, would not be formed for another year, but most of the early TPAs felt that ERISA transparency & fiduciary was a good thing because TPAs see the pressures and temptations of real-world benefits management. Over the years, SPBA has stood alone as being for or against some things that insurers, employers or other normal “allies” were lobbying for the opposite. In each case, SPBA’s position has proven correct.
Jimmy Carter shared the Nixon & Ford assumption that HMOs were the formula for a happy healthy America. The law which mandated employers to accept an HMO that solicited them was enforced more strongly. The Carter staff tended to assume they knew everything already, so no need to listen to anyone else. All of this was with the “conventional wisdom” political assumption (except ornery little SPBA) that National Health Insurance single-payer was a certainty in the near future. Fortunately, SPBA did make some progress with the Carter White House by approaching issues with senior officials from the economic-policy perspective.
Ronald Reagan is revered today, but SPBAs’ fiercest behind-the-scenes fight was with Regan’s favorite proposal called “Competitive Health”. It would have destroyed employee benefits in an anti-selection disaster. It would have required virtually every employer to simultaneously offer at least three separate health plans, one of which must be an HMO. Fortunately, we got into action before it was formally proposed, but it was an incredibly bitter fight (even a “raised voices” argument with the President & staff in the West Wing). SPBA was alone in that fight, because all the other benefits & employer groups wanted to curry favor with the popular new Administration. The good news is that President Reagan finally understood and backed down….though we later learned that he kept a senior person buried in HHS fine-tuning the idea for the remaining 8 years of his Presidency. Meanwhile, the Reagan IRS and other agencies also initiated a slew of cost-shifting and other cost-increasing laws and rules on employee benefit plans (such as Medicare Secondary Payor, no-reserves, COBRA, MSP, etc. etc.) However, despite (or maybe because) of my near-shouting match, President Reagan was personally extremely gracious to SPBA, sending written greetings to attendees at SPBA meetings and Christmas cards to SPBA.
George H.W. Bush
George H.W. Bush had the most personal and staff experience of any President. Cost of healthcare was rearing its head as a cancer that could choke corporate & government plan finances. So, his administration initiated more discussions & introspections about the future & options than any other Administration. Funny story: The White House held three high-level brain-storming meetings in the West Wing to advise the President. One was for employers & plan sponsors. One was for collectively-bargained & multi-employer plans. The third was for payers, such as insurance companies, HMOs, and self-funding. Because TPAs have intimate knowledge of all three areas, SPBA was invited to participate in all three. For some reason, the other participants in all three meetings didn’t have much to say, but Fred (surprise surprise) was full of real-world input & ideas gleaned from SPBA members. Consequently, the White House dropped the idea of the three committees and “merged” the role into just occasional brainstorming with SPBA. However, the first Bush Administration’s many outreaches never seemed to lead to decisions or action. It was only in the last days before leaving office that a top advisor admitted to Fred’s question why nothing ever progressed, spoke the ultimate truth of the health benefits issue: “This is a no-win political situation. No nation can afford to give all the people all the health services they think they deserve. So, you can never (politically) be seen as successfully making people happy.” (Translation: If we look busy & interested, we get credit. If we really do anything, people end up alienated because they want something more or different….preferably for free.) While that is cynical, it is a very important truism about political reality on health reform, even today. Remember it! You can’t keep all of the people happy all of the time.
The Clintons first contacted SPBA before the election, because of SPBA’s reputation for real-world insights and practical suggestions. (SPBA is totally non-partisan & non-political. We’ll brainstorm with anyone.) Because of the lack of progression with the Bush Administration, we were delighted to have a one-on-one chance to make suggestions to the other candidate. Fred Hunt started rattling off the background of TPAs, self-funding and ideas that would maximize private healthcare coverage for Americans. The leader of the Clinton staff interrupted with a football time-out “T” hand signal, and said , “You don’t understand, Fred; that’s not what we are here for. This is the Governor of a state whose budget is being eaten away by Medicaid, and he’s been the leader of all the other Governors, whose state budgets are being devoured by Medicaid. THAT’s what we’re here for.” That remains an incredibly candid insight, and that was a key secret incentive for the Hillary Clinton 1993 proposal and even today behind many health “reform” & “universal coverage” proposals. The Hillary Clinton proposal was not for national health insurance or universal coverage (despite retroactive hyping by both supporters & foes). The state “pools” were a way to force smaller employers’ work forces into state pools which states could then meld with their more expensive Medicaid population as a cost-shifting mechanism. Again, keep in mind that the desire of states to have some way of minimizing or avoiding their ever-growing crippling costs of health costs is still the secret agenda behind many health “reforms”.
The long political & PR battle over the Hillary Clinton proposal also exposed a weakness in how associations (and media) view issues: Once there is a proposal, organizations and the press assume that that is the only option that can be considered. So, for example, in the Clinton proposal the “debate” got artificially limited to whether the size of employer who would be forced into state pools would be 500 lives or 100 lives. Such narrowing the debate simply surrenders all the basic issues without a fight. There was tremendous pressure from sister associations and the media for SPBA to retrench to one of those choices. However, SPBA was nearly alone in not believing that the proposal would pass Congress, so why pave its way? SPBA’s Board showed tremendous strength and wisdom under heavy pressure in saying that SPBA’s position was “just say no!” to the whole idea. We were told by friends & foes that SPBA was being naïve, and not negotiating for the best deal (500 lives). However, history again proved that SPBA’s position was the final outcome (the Clinton proposal fizzled). The moral of the story as we look ahead is that we will again be faced with pressure to focus on only one or two options and only fairly minor points. All of us will need the strength of belief + character to not get sucked into that legislative trap.
Another feature we noticed about the Clinton Administration was that working-level staff (the incredibly important reg-writers) seemed scared or hesitant to talk or cooperate with “special interests” (any business or industry group). This made SPBA’s core work of helping TPAs & plans find how to obey laws much harder. We think that the reason for the reticence was that policy views at the top tended to make sudden swings of what was popular or OK. So, working-level key staff were afraid that comments or cooperation based on White House policy one day today… be career destroyers the next day because top White House hand changed their statements & minds.
George W. Bush
The George W. Bush administration’s biggest immediate change was an openness & willingness of all levels of political and working-level staff to talk and work openly. The high-level political staff and the President had strongly-held views & ideas. However, SPBA’ proven reputation for constructive candor led us to become friends with the highest levels of health advisors to the President, who encouraged SPBA to give extremely candid input (brutally blunt but constructive) based on real-world experiences form our member TPAs. In every situation, where SPBA advised President Bush that something would be an error, he (eventually) understood and almost always graciously adjusted. (I know that seems the opposite of the hype reputation of the President being stubborn. I think the difference is that, yes, the President and his Administration had very strongly held views. Most people & organizations are afraid to speak bluntly because of their personal career hopes or seeking organizational favors. SPBA simply tells the candid unbiased truth, and the President understood.)
A keystone of the George W. Bush Administration would have replaced (via starvation & anti-selection) employee health benefits. The Consumer Directed Health Plan (CDHP) concept was to switch to an individual-based health coverage system via HSAs. SPBA (very bluntly) said that instead of creating a mutually-destructive battle between employee benefits and HSAs, why not combine and let HSAs be an option for employee benefit plans, and let the high-deductible coverage be in a self-funded plan. The rest is happy history, and a high percent of HSAs today are reportedly in an employee benefit format, and it is one of the fastest-growing types of employee health plan. SPBA had also warned that if regulatory guidance for the new CDHP & HSAs was not quick & clear, the new concept would whither, like a new plant not given water. Key senior Bush staff made it happen. The IRS and other agency staff actively sought from SPBA and accepted ideas in areas needing clarification. Zoom! Regs that would normally take months, would be issued in days or weeks with surprising detail and clarity.
Barrack Obama had his first Blackberry chat with SPBA well before election day. The background is that for the past 5 or 6 Presidents, SPBA has been selected to pose a written question directly to both final candidates, and receive an answer. SPBA has been selected to be the voice of the employee benefits/insurance/health/pension community. As you can imagine, SPBA turns a question into an “explanation” & emphasis of a policy or need. Sen. McCain’s response was blah. However, Sen. Obama was intrigued and Blackberried back asking for more insight. We may have responded with overkill, because his final response afterwards was something like “I don’t understand much about this stuff.” That was probably a very honest layman answer, and he had only mentioned health coverage twice in passing in the campaign, so it was not a priority.
Of course, the historical irony is that Obama will go down in history as having single-handedly achieved major health reform that Teddy Roosevelt, Harry Truman and others had not been able to achieve. However, “Obamacare” was actually conceived & written mostly by the Senate Finance Committee, and then, due to a fluke of partisan political circumstances, it became the law, with very little input from the President.
So, that is the historical perspective of health policy of the various Presidents, told without the hype and any afterglow of sentimentality. It shows that employee benefits have no natural enemies, nor do we have any automatic friends & supporters. Success depends on entities like TPAs & plan sponsors doing a good job (fulfilling patients’ & sponsors’ justifiable expectations), and spreading the real-world insights to educate the community, media and political leaders in their home areas. It is also dedicated SPBA members willing to provide their real-world expertise & insights. Congratulations.