The Patient Protection and Affordable Care Act (PPACA) damages both American health care and its human capital. For employers, health care is a maintenance contract for supporting optimal physical and mental functioning of their employees – their human capital.
No business would want to turn their equipment maintenance over to the federal government for limited access to repairs, increased fees, higher taxes, and caps on how much can be spent on upkeep. When a unique piece of equipment gets older, a company does not want to be restricted or penalized for spending on repairs. They do not want some federal bureaucrat determining what repairs can be made. They do not want to be forced to buy a maintenance agreement. They certainly don’t want to subsidize others who otherwise would not buy maintenance on their equipment.
Of course, human capital and equipment capital are very different. Human capital brings intelligence, problem solving, creativity, teaming, and “intrapeneurial” values to a business. Employees bring understanding, compassion, mentoring, and flexibility. That is why human capital is the most important asset of any business.
A June 2010 survey supported by the Institute for Health and Productivity Management found that 62 percent of American businesses and nearly 85 percent of employees say the workplace must play a leadership role in creating a healthier workforce and helping to curb rising health care costs. In their own self interest, employees want employers to take an active role in creating a healthy workplace.
As individuals, personal human capital is the economic value workers bring to a company. The Health as Human Capital Foundation (HHCF) defines human capital as three personal assets:
- Skill – education and experiences,
- Motivation – attitudes and values, and
- Health – physical and mental capacity.
The development of personal human capital creates income opportunities and long term financial growth for individuals. Without health all the other aspects of personal human capital are quickly diminished. Individual health and a healthy workplace is the link between personal career interests and corporate productivity interests.
PPACA will not help employers improve their human capital with lower costs or access to quality of care. A 2010 Towers Watson employer survey shows the top two goals are containing costs and encouraging healthier lifestyles, but few employers are hopeful PPACA will help them. A 2010 Mercer survey shows employers expect costs to increase by an additional 3 percent of more due to PPACA.
Employers are not interested in turning the maintenance of their human capital over to government insurance. The Towers Watson survey found that beginning in 2014, when large employers must offer at least the government defined “essential benefits” to full-time employees or pay a penalty, 88 percent of surveyed employers are either definitely, or likely, to continue providing health benefits.
Lowering costs is not about more government or private vendor management of care, limiting formularies, or cost shifting. Changes are required across the corporate environment with consistent messages and an emphasis on personal responsibility. It is not just health care. It is about employees’ active engagement in all aspects of the employment relationship.
Studies from HHCF indicate that identical companies, with equalized populations, and the same benefits can have an 84 percent difference in health care costs. Human capital combined with “corporate humanity” may be the answer. “Corporate humanity” is the degree to which companies treat employees as rational intelligent adults. Human Capital Management Service Group (HCMS) studies show that companies that treat employees with respect and dignity in other areas of benefits and work assignments have lower health care costs.
Few corporations have taken the time to develop inclusive ways to engage employees. Four areas to establish effective employee engagement are:
- Shared Rewards – providing employees with something to gain
(e.g. Are employees eligible for bonuses?) - Shared Responsibility – putting employees at risk with something to lose
(e.g. Do employees have a paid-time-off-bank instead of sick leave?) - Asset Growth – giving employees something to protect
(e.g. Do you have a 401(k) available with at least a 3% corporate match?) - Ownership – allowing employees the freedom to choose
(e.g. Do you offer a consumer-driven health care or health care consumerism plan?)
PPACA is not the answer to improved human capital or a more productive company. It is a government and regulatory barrier between employers and employees. A recent Rasmussen public opinion poll showed 56% oppose PPACA and want it repealed.
Overall corporate environments that engage individuals drive lower health care costs and improve productivity more than most companies have previously appreciated or recognized. Improving human capital may involve a corporate makeover in many areas, a rethinking of the corporate treatment of staff, providing new support tools, creating opportunities for choices, raising expectations, and a promotion of personal responsibility.
Corporate humanity engages employees within and outside of their health plan. Within the health plan it may be health saving accounts and health care consumerism. Outside the health plan it includes employees acting and being treated as adults. It’s time to recognize that health and health care costs do not stand alone within an organization. Health plan costs cannot be viewed as a single budgetary line item. We now know that the cost of health care is not only a function of the individual’s health, but the overall culture of a corporation. And that is not the responsibility of the federal government.
As to PPACA, some suggest repeal, others want repeal and replace. The best choice may be an annulment. Much like a marriage annulment, maybe we can pass a bill that considers PPACA as never having legally existed. It may be the only way to assure that the new 159 agencies and budgets are discontinued. We can then pass a true bipartisan health reform that helps maximize individual and corporate human capital. I believe a new Congress could do that within 90 days. The American worker would be the winner and the productive engine that leads the world.
Ronald E. Bachman FSA, MAAA, is a Senior Fellow at the Center for Health Transformation, an organization founded by former U.S. House Speaker Newt Gingrich. Nothing written here is to be construed as necessarily reflecting the views of the Foundation or the Center for Health Transformation or as an attempt to aid or hinder regulations or the passage of any bill before the U.S. Congress.
