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PROLOGUEEmployers’ Health Coverage StrategiesWhat a difference a decade makes. From boom to bust to somewhere in between, the current decade is distinguishable from the previous one, across innumerable metrics. Perhaps one of the more alarming points of distinction is reflected in the reality that the past six years represents the first span in a decade to see a steady decline in the number of Americans covered by health insurance offered through employers. From a high-water mark of 62 percent of the nonelderly population in 2000, the ranks of those with access to employer-based coverage had shed upward of five million people by 2004. The drivers of this trend were neither subtle nor elusive. Beyond economic perambulations swelling the number of unemployed people, and consequently those blocked from that access point for obtaining insurance, the relentless upward spiral in health care spending played a major spoiler role. As regularly reported in the pages of Health Affairs, health care costs, with some exception, have increased disproportionately for much of the decade. Employers of all stripes, feeling the squeeze on their bottom lines, squeezed their employees in turn by resorting to increased cost sharing and offering high-deductible health plans, both of which inevitably exerted a chilling effect on employee coverage take-up rates and use of health services. A follow-on from the decline in job-based coverage, as reported by James Robinson earlier in this issue, has been a morphing of the insurance industry itself as it struggled to maintain profitability in the face of such new "realities on the ground." Among the more intriguing industry adaptations has been resignation to the diminution in employer-based enrollment in favor of more aggressive participation in public programs. Such nimble tap dancing has permitted the industry not only to hold the line on profitability but to exceed projections and expectations. Employers have sought to take a page from this survivalist playbook by formulating new adaptive strategies of their own, navigating both budgetary pressures and employees’ needs. The papers that follow relate the experience of both public and private employers. First, Aaron McKethan, Daniel Gitterman, Allen Feezor, and Alain Enthoven, drawing on the experience of key stakeholders in twelve of the largest U.S. public employee health plans, explore the breadth of challenges confronting leaders in this genre as they grapple with issues of benefit redesign; changing employee demographics; and the interactions among states, retirees, and Medicare. Next, Susan Busch and colleagues report on Alcoa’s recent strategies for holding the line on health care spending while preserving employees’ incentives to obtain appropriate and essential health care services, including elimination of cost sharing for preventive care.
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