Will reform bite into dental coverage? – President Clinton’s healthcare reform package
Employers are debating what they will do about dental benefits under Clinton’s reformed health care system.
Employers that offer employee dental coverage may face a dilemma on whether to continue the benefit under a reformed health care system.
President Clinton’s health reform plan, The American Health Security Act of 1993, calls for dental coverage for children and teenagers up to age 18. But for adults, the plan includes only emergency dental care.
As defined by Clinton’s plan, emergency dental treatment includes “simple extractins, treatment for acute infections, bleeding, and injuries to natural teeth and oral structures for conditions requiring immediate attention to prevent risks to life or significant medical complications.”
Because the tax deductibility of supplemental benefits beyond a standard benefits package would be eliminated, employers need to weigh whether to eliminate dental benefits or pay more to maintain the benefit as a bargaining chip. A recent survey done By Hewitt Associates, benefits consultants in Lincolnshire, Ill., found that 59% of employers say they would be “very likely to” or “somewhat likely to” offer a supplemental dental plan even if under a revised Clinton proposal they would not be allowed a tax deduction for the cost of such a plan.
At the same time, however, a significant numbe of employers said they would withdraw dental coverage, according to the survey of 357 benefits managers and human resource officers at medium-sized and large employers. Indeed, 35% said they were “not at all likely” to continue to offer dental coverage as a supplement to Clinton’s standard benefits package. “That 35% of employers is a significant chunk of the 90% of employers that currently offer dental benefits, so dental is an important issue,” says Frank McArdle, manager of Hewitt’s Washington Research Group.
Employers provide dental coverage by offering employees a dental plan or a flexible spending account that the employee can use to pay for dental services. Under Clinton’s plan, flexible spending accounts would be eliminated and some employees would forfeit dental care that they can no longer afford, McArdle says. The elimination of flexible spending accounts “would amount to an immediate tax increase for employees” because typically such accounts are not taxed, he says. Historically, flexible spending accounts have provided employers with a tool to facilitate cost-sharing with employees. Without such accounts, employers may find cost-sharing more difiicult in the future, McArdle says.
According to a survey of 24,048 employers done by A. Foster Higgins & Co. Inc. benefits consultants in New York, 48% of employers required unmarried employees to contribute 41% of dental premium costs in 1992. Similarly, 67% of employers required married employees to pay 45% of dental premium costs.
In a reformed health care system wherein employees must contribute more, workers may choose managed dental care rather than traditional indemnity plans, says John Erb, a principal at Foster Higgins. “Managed dental plans have proven that they can keep costs down while retaining quality,” he says, noting that fee-for-service be eliminated.
Last year, 86% of employers offered a fee-for-service dental plan, compared with 10% that offered a preferred provider dental plan, and 23% that offered an exclusive provider network plan option, according to Foster Higgins’ survey.
Despite the progress made by managed dental care, many providers could see their businesses contract by as much as 40% within a reformed health care system, says James Lindsey, president and CEO of California Dental Health Plan, a dental HMO in Tustin, Calif. Providers that have not formed strategic alliances with managed care organizations will suffer most in terms of lost business and revenue, Lindsey says. Meantime, the American Dental Association, a trade group in Chicago that represents 140,00 dentists, argues that the focus of the Clinton plan should be shifted from children to people with poor dental health. “What is required are benefits structured according to need, not age,” says Chris Martin, an ADA spokesperson.
For employers that offer dental coverage, the dilemma will be whether to continue offering a complete dental benefit. “Adult dental coverage is a gaping hole in Clinton’s plan,” argues Erb. Historically, employers have used dental plans as a bargaining chip during benefits negotiations with unionized employees, Erb says. That practice is likely to continue, he adds. “Dental has always been an easy benefit to add because it was fairly low cost. Whenever employers wanted to raise the deductible for employees or get other concessions, they would offer to enhance the dental plan,” Erb says. In the future, issues such as dental and long-term care will take on even greater significance.
Moreover, an employer concerned about employee relations will “find it very difficult to trash a dental program,” Erb argues. While most employers are expected to continue offering dental coverage, some may require employees to contribute more toward the cost of their dental plans, while other employers may ask employees to pay the total cost, Erb says.
Employers that withdraw dental coverage or that offer a plan while requiring employees to oay 100% of cost may cause more harm than good, says Herbert Hazelkorn, associate professor and director of the Program in Dental Public Health at the University of Illinois, in Chicago.
He argues that many employees will regard dental care as an added expense and will forgo regular preventive care as a result. Ultimately, this could lead to higher costs as dental disease that could have been prevented or treated earlier develops into a serious problem that is costly to treat, Hazelkorn says.
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