HR Impacts – Healthcare Reform & Public Policy Mandates

We are watching the health care reform debate with keen interest. Not from a political perspective, although like most Americans we have personal opinions and preferences, but from an HR perspective. Ours is a pragmatic view gained from more than twenty years on the front lines in HR helping businesses of all sizes address significant changes in public policy. This experience makes us acutely aware of the risks and the challenges dramatic public policy shifts bring including consequences both intended and unintended. All of this public policy change must be analyzed, managed and solidly integrated into the revised business model to minimize disruption and stay in compliance.

The current healthcare debate illustrates the turbulence significant policy changes bring. While the present debate rages on, it is important to put it into historical context. The history of how health care policy came to be so closely linked to employment is an interesting one. Even prior to the 1920’s there were proposals to enact some form of nationalized health insurance but the proposals failed for a number of reasons including low demand for medical care, low health care costs, and a medical community determined to avoid government intervention.

As medical care improved the demand for health care increased as did the cost. The first insurance programs were prepaid hospital plans, eventually leading to the formation of Blue Cross and later the Blue Shield programs in the 1930s. These early efforts required legislative changes to support their operation and much of the development of this private system was led by hospitals and physicians who wanted to avoid creation of a public insurance system. Insurance continued to evolve while remaining in the private sector, and Blue Cross and Blue Shield discovered they could address the issue of adverse selection by offering insurance to groups of employed workers. Thus the birth of the link between health care and employment that continued to evolve and grow stronger as public policy continued to support an employer-based health care system, including tax related financial incentives. Health insurance and HR remain firmly interconnected as a result and unless the entire employer-based healthcare system is completely eliminated and replaced by a public option that will remain true.

The Consolidated Omnibus Budget Reconciliation Act (COBRA) first enacted in 1985 was one such policy shift. COBRA was implemented to bridge the gap created when individuals and/or their dependents lose employer sponsored health coverage. Although COBRA policy is now well integrated into the fabric of our health care system it was a hotly debated public policy change when first proposed. Later a heated debate followed in California when CAL-COBRA brought employers with as few as two employees under the COBRA mandate. And again in 2008 we saw major COBRA change with premium subsidies mandated in response to the recent economic downturn.

Another major HR mandate created by a shift in public policy was the passage of the Americans with Disabilities Act of 1990. A direct descendant of the civil rights movement, this legislation had significant impact on employers as facilities, hiring and management practices underwent dramatic changes. Even after nearly 20 years we find organizations in need of guidance to ensure compliance with all of the complex regulations resulting from this public policy decision. Even when failure to comply is unintentional businesses can face serious consequences.

The creation of the Family Medical Leave Act of 1993 (FLMA) was a policy mandate that grew directly out of dramatic changes in the make-up of the workforce. Women often lost their jobs due to pregnancy and their role as caregivers had become increasingly complex as families struggled with challenges of protecting their jobs when faced with personal or family medical or care giving responsibilities. California and some other states also created programs supplementing or overlapping the Federal legislation, leaving employers faced with complex leave management issues. Again, a shift in public policy created complex challenges as organizations sought answers to a maze of regulations and YPP became the resource they relied on to assure they remained compliant.

These and many other public policy changes over the years have given YPP a great deal of hard earned expertise in implementing HR mandates created by public policy changes. Partnering with clients to manage these and other policy implementation challenges over many years has given us some insight on how an employer can best prepare to integrate policy changes with a minimum of disruption to the business.

So how do we navigate though the policy shift process? At YPP we take a multifaceted approach beginning with close attention to any policy debate that may impact HR. Such diligence ensures we have a comprehensive understanding of the issues and outcomes. Once we know a policy change is likely we perform a painstaking analysis to determine how clients will be affected. The final stage of the process is the development of an implementation strategy including procedural steps to incorporate the changes and timetables to ensure timely compliance. Policy development is never tidy, as the current healthcare reform debate demonstrates, and the target is always moving so we must be prepared to make many adjustments throughout the process.

Although the current situation is uncertain and the final outcome unpredictable we believe every organization can take steps to begin prepare for this or any significant policy shift to minimize disruption, especially during the implementation phase of the process.<

  • Stay informed, for instance trade associations or other professional memberships will provide more relevant information than the talking heads on cable news.
  • Identify your team of experts and stay in touch. Their help with analysis and an implementation strategy will save time and prevent missteps.
  • Check in with your HR team and get their perspective
  • Know your current status, in this case your present health plan and what it offers.
  • Plan your resource allocation including people, time and money.
  • Consider outsourcing the transition so you can focus on the business of your business and minimize your risk of getting it wrong with the attendant penalties and frustrations.

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