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Employee Benefits Policies of 7 Presidents: A Historical Perspective

As you've noticed, there are plenty of hype & hysteria predictions of what various Presidential candidates and the new President would do to employee benefits. SPBA's goal is keeping you informed with insider reality perspective so you're not blinded by the hysteria. In this UPDATE, read the piece "No National Health Insurance, But Take Advantage of the Opportunities", and flip through recent UPDATEs for the articles giving you reality-check insights. The most important thing to remember is that Employee Benefits are a political orphan. Neither party nor left nor right are a natural enemy 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. That is why we keep telling you that YOU need to shape public opinion in your communities (which is the 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 might have 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 everyone feel better and looking forward (though the employee benefits/insurer community felt that such strict fiduciary duty, limitations and reporting would kill many current plans and prevent any new plans from every being created). 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 that National Health Insurance was a certainty in the near future. Ronald Reagan is revered today, but SPBAs' fiercest behind-the-scenes fight was with Regan's favorite proposal called "Competitive Health", which would have destroyed employee benefits in an anti-selection disaster. It would have required virtually every employer to offer at least three separate health plans, one of which must be an HMO. Fortunately, we got into it before it was formally proposed, but it was an incredibly bitter fight. And SPBA was alone, because all the other 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. The Reagan IRS and other agencies also initiated most cost-shifting and other cost-increasing laws and rules on employee benefit plans (such as Medicare Secondary Payor, etc. etc.) However, President Reagan was personally very gracious to SPBA, sending greetings to attendees at SPBA meetings and Christmas cards. 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 fostered more discussions and 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's Fred Hunt was invited to participate in all three. For some reason, the other participants in all three didn't have much to say, but Fred (surprise surprise) was full of real-world input & ideas 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, said about health payment, "This is a no-win situation. No nation can afford to give all the people all the health services they think they need. So, you can never (politically) be seen as successfully making people happy." (Translation: If we look busy & interested, we get credit. If we really tried anything, people end up alienated because they want something more or different.) While this is cynical, it is a very important truism about political reality on health reform, even today. 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 Governor's whose state budgets are being devoured by Medicaid. THAT's what we're here for." That remains an incredibly candid insight, and that is the secret incentive for the Hillary Clinton 1993 proposal and even today behind many health "reform" & "universal coverage" proposals or opposition. 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 Medicaid 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 surrendered 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, we did not believe that the proposal would pass Congress, so why pave its way? SPBA's Board showed tremendous strength and wisdom under 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 na•ve, and not negotiating for the best deal (500 lives)...but in the end, history proved that SPBA's position was the final outcome. 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 believe & character to not get sucked into that 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 today might be career destroyers tomorrow. 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 very definitely have strongly-held definite views & ideas. However, SPBA was fortunate to become friends with the highest levels of health advisors to the President, who encouraged SPBA to give extremely candid (brutally blunt but constructive) input. In every situation, where SPBA has advised President Bush that something would be an error, he has understood and graciously adjusted. (I know that this seems the opposite of the conventional reputation of the Bush Administration. I think the difference is that, yes, the President and his Administration have 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 it like it is very bluntly, and seeing the candid unbiased truth, the President has 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 let HSAs be an option and vehicle for employee benefit plans, and let the high-deductible coverage be a self-funded plan. The rest is happy history, with about 2/3 of HSAs today reportedly in an employee benefit format. 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. Roy Ramthun, who was senior CDHP advisor at the Treasury Department and White House shaped history and took on the challenge. The IRS and other agency staff actively sought and accepted ideas and areas needing clarification, and what would normally take years, would be issued in days or weeks with surprising detail and clarity. So, that is the historical perspective of Presidential health policy 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.