America's Benefit Specialist March 2023

NABIP’s LEGISLATIVE PRIORITIES

Under fully insured coverage, employers purchase a plan that meets federal Affordable Care Act requirements as well as other state regulations. These plans still offer the benefits of employer-sponsored coverage and the natural pooling it creates, but employers do not bear the full financial risk of claims. Regardless of funding arrangement, employers still hold a fiduciary interest in the cost and quality of coverage under ERISA. Employer-sponsored coverage—whether self-insured or fully insured—holds a distinct advantage over coverage sold in the individual market. Workplace-based coverage groups together employees without regard to their health status. These pools tend to be more stable over time and more predictable, leading to lower premium trends than other pooling arrangements. Controlled entry and exit from the plan, employer contributions and the ability of younger, healthier employees to offset the cost of older or less-healthy employees helps keep coverage more affordable across the entire workforce. This natural pooling of employees in the private sector is more affordable and effective than pools in which less-healthy individuals have a greater incentive to join than do healthier ones. UPHOLD THE TAX TREATMENT OF EMPLOYER SPONSORED COVERAGE For decades, employees and employers have benefited from the preferences in the Tax Code that exclude the employer’s contribution toward employment-based health coverage from being considered compensation for tax purposes, allow NABIP OPPOSES LEGISLATION THAT WOULD ONLY CAP OUT-OF-POCKET COSTS FOR EMPLOYEES WITHOUT ADDRESSING THE COST OF THE DRUG ITSELF.

public coverage as it is essential to modern healthcare. Phar maceutical manufacturers, pharmacy benefit managers and others are often wrapped up in a convoluted and mutually dependent web that adds needless complexity to coverage. Greater transparency and innovative solutions are needed to ensure that these life-saving drugs can continue to be avail able when they are needed. NABIP supports additional steps to improve transpar ency and greater oversight and regulation of the pharma ceutical supply chain and the current patent-approval pro cess, and the ability to extend patent exclusivity through incremental changes. Prices for insulin are unsustainable, particularly when compared to the cost of manufacturing insulin. While the federal government has the ability to negotiate high-cost drugs, allowing a cap on copays for Medicare beneficiaries to be feasible, such an approach in the private-plan market, including employer-sponsored plans, shifts the high cost of insulin to the plan but does nothing to address the cost of insulin overall. We strongly encourage Congress to employ additional oversight and other means of addressing this problem comprehensively rather than merely capping the out-of-pocket cost in private plans. NABIP opposes legislation that would only cap out-of pocket costs for employees without addressing the cost of the drug itself. PRESERVE AND STRENGTHEN EMPLOYER SPONSORED HEALTH COVERAGE Employer-sponsored coverage has been the backbone of our nation’s health system for more than 80 years. Businesses of all sizes contribute vast financial, administrative and other re sources to employees and their families through the employ er-sponsored system and have a vested interest in healthcare quality, value and system viability. Benefit offerings and cov erage plans in the employer-sponsored system are as diverse as employers and employees themselves. Employers may choose to self-insure or purchase one or more fully insured plan options for their employees. With self-insured coverage under ERISA, employers tailor coverage to meet their workforce’s specific needs regardless of their work or home location. Many employers operate in multiple states with employee populations in each. Self-insured cov erage allows a common benefit plan for all of these employ ees. These employers pay all healthcare claims and bear the financial risk of claims made by covered employees under the plan. Employers often utilize a third-party administrator for plan management and, in most cases, rent provider and pharmaceutical networks, secure stop-loss coverage, and secure other vendors to ensure quality plan operation. Most important, employers maintain a fiduciary interest under ERISA in the cost and quality of coverage for their employees.

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