Here's an informational alert on a new development in the state of the union's health care crisis.
Employer group plans, which usually have better benefits and coverage, are being dropped and switched to payouts to employees to buy their own individual coverage.
Bush's SOTU address did not address this trend specifically, but since Bush promotes private individual health plans as a panacea, this terrible new trend is likely to continue without government intervention and perhaps tacitly promoted as part of Bush's belief in rewarding insurance company cronies with private individual insurance as the 'solution' to our health care coverage crises. If this trend continues, Bush and his insurance company cronies will be in ecstasy while Americans suffer even more.
"This may be the future of health insurance," says Trikolas, CEO of Ilios Partners in Chicago, which plans to switch its 100 employees from group to individual coverage this year... As health insurance costs continue to rise, some employers are adopting a controversial new approach: ending group coverage and giving employees $50 to $200 or so a month to help them buy their own."
Naturally, this development is causing high anxiety for many workers who previously had group plans. And excuse me, but how much coverage is $50 to $200 going to buy? For many, it won't even buy a lousy catastrophic coverage plan. This type of health care benefit plan sounds about as helpful as a Katrina style rescue plan for a Katrina hurricane victim.
Julie Appleby of USA Today reports on this story I linked to in the intro to my diary that:
Critics say the change would end the long-standing, implicit social pact to provide coverage to sick and healthy workers alike in favor of a more Wild West, go-it-alone approach that could benefit young and healthy workers but leave those older and sicker unable to get medical insurance.
That's because ending group coverage removes a key protection in group insurance plans. Insurers cannot reject members of group plans for health reasons, and everyone in the group pays the same premium.In most states, insurers can reject individual applicants for health reasons and can charge widely varying premiums based on the applicant's age, health history and other factors. Only in a handful of states, such as New York, Massachusetts and New Jersey, must insurers sell coverage to everyone, regardless of their health
No kidding.
Julie Appleby of USA Today has been writing what is actually an excellent series on health care issues. Don't scoff, I know that paper is not exemplary in journalism, but on occasion over the years, they do have some good reporting. I happened upon this article by accident while in a coffeehouse the other day picking up a stray USA Today. You never know when you might find good reporting.
Appleby is smartly on the scoop reporting a trend that could become a disastrous wave of the future. As she puts it this has only begun: "Though no one tracks the number of employers who send workers out on their own, it is only a fraction of the total number who offer health insurance."
However, with rising premium costs and the shaky economy, already there is much economic pressure for employers to drop group plan coverage.
In a previous article, Employer-provided insurance continues to decline, Appleby discusses how the rise in health care premium costs are already causing more companies to drop offering any coverage or dropping existing coverage (without providing individual plan payouts).
Statistics for 2005 showed that "the percentage of people (workers and dependents) with employment-based health insurance has dropped from 70 percent in 1987 to 59.5 percent in 2005. This is the lowest level of employment-based insurance coverage in more than a decade."
It may seem that offering payouts for individual health care plans is better than offering no coverage at all. And perhaps it is.
But the bigger danger is that with payouts for individual coverage, companies may start to think they have covered their health care benefits package and stop offering group plans. If such a trend continues, group plans may become rare or non-existant and that would increase the health care crisis greatly.
Some enterpreunerial companies see an opportunity in this development. Surprise, surprise:
"This is a multibillion (dollar) opportunity," says Vik Kashyap, founder of Canopy Financial. Last month, Canopy began a similar reimbursement service and steers workers to insurers who sell individual health policies.
Ain't modern predatory American capitalism grand?
Of course, there's the employer's side of the problem at work here too. It's understandable that with rising health care costs, a reduction in cost looks good and logical for an employer to pursue:
Bret Berneche, chief executive officer of Cardinal Homes in Wylliesburg, Va... told his employees that their group health insurance would end that month.
Between premium increases and mounting state and federal rules, offering insurance was costing the company too much — $846,000 a year.
"It was certainly a blow," Berneche says. "The choice was having the health plan we had or going out of business."
After he canceled the group plan, he heard about Pilzer's program and signed on. Cardinal puts $100 to $200 a month into each employee's health reimbursement account.
Even if Berneche carries out his plan to nearly double the size of his company, he still expects to save at least $360,000 this year with the new program.
Businesses will of course act in their best financial interest. So we know where this trend will head.
While the Bush Administration has no official response to this developing issue, one that Congress should take up, here's what Bush said in yesterday's SOTU:
On the critical issue of health care, our goal is to ensure that Americans can choose and afford private health care coverage that best fits their individual needs.
And tonight I propose that individuals who buy catastrophic health care coverage, as part of our new health savings accounts, be allowed to deduct 100 percent of the premiums from their taxes...
A government-run health care system is the wrong prescription. By keeping costs under control, expanding access, and helping more Americans afford coverage, we will preserve the system of private medicine that makes America's health care the best in the world.
Note Bush's emphasis on private health care coverage and the use of government through tax breaks to encourage buying individual catastropic health care plans. It's not hard to speculate that employers dropping group plans in favor of individual coverage payouts fits with Bush's vision of health care dystopia.
Now, more than ever, we need a Democratic President, any Democrat, to stop this madness.
More links to related articles on health care coverage issues:
Employers check family ties to cut health care rolls. Part of the trend towards reducing coverage entails discriminatory employer intrusion into employee's private information.
Consumer unease with U.S. health care grows. This article also has a number of other links to USA Today health care articles in their series on the crisis.
Is the End to Employer-Paid Health Care Near? Another look at the trend towards dropped coverage.
Employer-Sponsored Health Insurance: Pressing Problems, Incremental Changes from Health Affairs Policy Journal More ways companies strategize to reduce health care benefits.
Employers can drop insurance coverage for those 65+ In a similar vein, a court ruling allows more dropped coverages.
What's Wrong with America's Health Care The AFL-CIO weighs in on this issue.
Health Insurance Coverage, filled with statistics on health care coverage issues.