Large Employers To Form Health Insurance Purchasing Pool for Four Million Uninsured Employees

As expected, about 50 of the largest U.S. employers on Monday announced plans to form a health insurance pool for about four million part-time, temporary and contract employees who lack coverage, as well as early retirees, former employees who have exhausted their COBRA coverage and children of employees who are students but no longer qualify for coverage, the Chicago Tribune reports (Japsen, Chicago Tribune, 5/11). HR Policy Association, which developed the plan in conjunction with Hewitt Associates, said that employees at the companies -- which include Ford Motor, Gap, Home Depot, IBM, Sears Roebuck and Textron -- would have access to a number of health plans, from low-cost discount cards for medical services to comprehensive benefit packages (California Healthline, 5/10). The employers would hire a single health insurer to provide the health plans, which would have lower prices than individual health insurance policies currently available on the market (Brubaker, Washington Post, 5/11). J. Randall MacDonald, senior vice president for IBM, said that the employers will seek discounts of at least 10% to 15% (MacDonald, Hartford Courant, 5/11). Under the plan, employees would cover the cost of their health insurance, which could range from $30 per year for a membership card that provides access to group coverage rates to as much as $2,000 per year for more comprehensive coverage provided regardless of current medical conditions (Washington Post, 5/11). The plan could take effect by early 2005 (Hartford Courant, 5/11). Officials for Aetna, Cigna and UnitedHealth Group on Monday said that the companies would seek the contract to administer the plan (Washington Post, 5/11). The company that secures the contract would have to meet performance standards to ensure quality (Chicago Tribune, 5/11).

The employers said they decided to form the health insurance pool because double-digit premium rate increases in each of the past three years are "not sustainable," the Courant reports (Hartford Courant, 5/11). "American business is fundamentally saying something has to be done now," MacDonald said (Bloomberg/Dallas Morning News, 5/10). He added that increased health care costs are "perhaps the single most important domestic issue facing our nation" (Hartford Courant, 5/11). The employers also maintain that gaps in health insurance are "hurting productivity at their vendors and boosting costs," Bloomberg/Morning News reports (Bloomberg/Dallas Morning News, 5/10). They said that the plan would help decrease absenteeism (Washington Post, 5/11). In addition, the plan would reduce the number of uninsured U.S. residents and could "eventually help control medical care cost inflation," Paul Jackson, a spokesperson for United Technologies, said (Hartford Courant, 5/11). However, Laura Clay Trueman, executive director of the Coalition for Affordable Health Coverage, said, "Part of this is a response to bad publicity," such as recent media reports that have focused on questions about health coverage for Wal-Mart Stores employees. The employers "want to show that they want to develop some opportunities for these people to get coverage," she added. Greg Lee, senior vice president for human resources at Sears Roebuck, said that the plan for the first time would allow the employers to provide health insurance for part-time employees, adding, "So this is a fabulous opportunity from our perspective to do some good" (Washington Post, 5/11).