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POLICY: Employer health insurance and stuttering efforts to delude the public

In The New York Times Milt Freudenheim reports a little too gushingly about the attempt by a number of big companies to let the part-time employees that they don’t cover buy into their health insurance programs.

The companies are taking a small first step toward slowing the spiraling growth of the uninsured, who now number more than 45 million. They acknowledge that the program is far from an overall solution, but they are addressing a challenge that government officials have largely ignored, said Steven M. Coppock, a senior actuary at the Hewitt Associates benefits consulting firm, which is helping the association with the program.

Surprise, surprise there’s a benefits consulting firm selling yet another new idea here. I’ve started describing CDHPs as the bastard child resulting from a one night stand between benefits consultants with nothing new to sell and a libertarian think-tank that can’t do basic math. This pretty much comes into the same category.

There are some good things about this program, in that it allows the uninsured to buy into the benefits of a big group program, at the same rates that the company is paying for its "real" employees, and not having to worry about pre-existing conditions. Of course, this won’t do a whole lot to solve the uninsurance problem for two reasons. One, the vast majority of the uninsured don’t work for these big companies (or if they do they work for companies that pretend that they’re not big, like the franchised outlets of the fast food restaurants). Two, the problem of the majority of the uninsured is not just that they don’t have access to insurance, but that they can’t afford it. There are some people who are priced out of the individual market by medical underwriting who can buy a much better product in the group market, and for them this is a good option — but that’s a low number. In general you might get a better rate (in terms of premium per benefit rather than straight premium cost) from a group plan, but if you can’t afford an individual plan of any kind you probably couldn’t afford this either.

Unless I’m really missing something there are three blindingly obvious statements to be made about this effort.

1) Part of the way employers have got out of offering benefits is by asking employees to contribute for their dependents’ costs. The numbers of employees who are offered benefits (especially for dependents) but don’t take them up is high and increasing, (although that only accounts for about 1/4 of the uninsured–the rest just don’t get offered insurance by their employers). This program is really just an extension of that, and regular employees must be feeling that they are not so far away from being told that like the part-timers, they too must start paying for their care. That’s the trend that the NY Times should be writing about. While it’s not what they are writing about, plenty of others have noticed.  (Note that employees remain highly opposed to losing health benefits because they understand the grimness of the alternative).

2) As the Progressive Policy Institute and many others have suggested, if we are to allow people to buy into group programs, the logical way to do it is to open the FEBHP to everyone. Of course all buying groups like this will attract poorer risks who can’t get a better deal from the cream-skimmers in the individual market — but the FEBHP might just be big enough to let them all in and deal with it, and of course it has the heavy hand of the Feds behind it to spank any health plan that starts playing games.  Of course letting everyone into Medicare is a further logical extension….but let’s not get too far ahead of ourselves.

3) Given how ineffectual this is going to be, why is the NY Times covering it?

Coda: By the way I’m pretty unimpressed with the HR people at big companies. I talked to a group of VP plus level HR people last year, and I gave them a hard time about how they were allowing the health care system to run them around.  A number of them said, "but we do so much more than we did five years ago". I asked them which of their other suppliers had they allowed to hit them up with 15% annual increases for the past five years running, and not one of them had a word to say.

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LilyThomas David KehoeBlue Cross of CaliforniaCalifornia Health InusranceRon Greiner Recent comment authors
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Lily
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It is possible that your employer is aware of the prescription medications you are taking and the health conditions associated with them. Even though there are confidentiality laws in place to protect you, these laws are rarely enforced as it is difficult to prove that an employment decision has been made based on a health condition. The only real way to guard your privacy is to not use your company’s health plan to purchase medications for questionable or embarrassing conditions. I found an excellent prescription discount card at http://www.rxdrugcard.com. Low membership fee. Drug prices posted. Check it out!

Thomas David Kehoe
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Health insurance usually doesn’t cover stuttering treatments, but most stutterers can get help paying for treatments via state vocational rehab programs or state special telephone equipment programs. My website has a page about discounts and subsidies for anti-stuttering devices.

Blue Cross of California
Guest

Employer health coverage is great to many employees. It is a great benefit and can be crucial to families.

California Health Inusrance
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I am happy to hear companies are actually taking a step to help improve insuring employees.

Ron Greiner
Guest

Rick, I didn’t say that Governor Jeb Bush got his tax free HSA from me. I did say that Ford Motor Company was charging 3 times more than HSA coverage for the family I did enroll last night. The family has 3 children, 7 and 4 year old little boys and a 1 year old little girl. I saved them $600 a month plus let them go tax free with an HSA. Is that populist enough for you? I know which way the political winds are blowing because I help blow them. I also think Governor Granholm is way out… Read more »

Rick
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Rick

theorajones, you’re right that people need to go into these plans with open eyes. There will undoubtedly be attempts to equate the “health benefits” that they offer with “health insurance.” That was happening before these plans came along. I’ll leave it to my brothers in the fourth estate to out such cynical behavior in public forums. Everyone can go to a public library and log onto the web, read a newspaper, or browse Consumer Reports. Also, the competitors of the companies who will be selling these plans can and should identify loudly and clearly when misrepresentation occurs, and encourage the… Read more »

Rick
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Rick

I don’t know if I’d be promoting the fact that millionaires and important people are buying your policies. It’s an ego stroke, not a sales tool. The current political winds are blowing in a more populist direction. Stick to the families that work for FoMoCo.

Ron Greiner
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Government Controlled And Employer Based, DANGEROUS, Health Insurance – Days Are Numbered. Propaganda says that “Group Employer Based” health insurance is less expensive. I call it “The Big Lie.” Matthew posted the New England Journal of Medicine article last week on HSAs and the “Ownership Society” that proved that “Individual Medical” is less expensive in both large and small firms. Newsweek has a new article from Paul Zane Pilzer called “Insuring Yourself” that does a pretty good job of explaining the truth. You can tell this guy isn’t too smart but it’s a great read anyway. He does call “Individual… Read more »

gadly
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gadly

//the public mistakenly believe that the uninsurance situation is improving because of efforts like these.//
The cynical take on this is that the public doesn’t care about uninsurance in general. They care about themselves, their friends and family, and people “like” them. Therefore, if an initiative can just cover enough of the people who are considered to be the political constituency, then everyone else will just be dismissed as complainers who failed to take personal responsibility or something. :-p

theorajones
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theorajones

Fair point, Rick. But while it’s better not to curse people who are trying their best, it’s critically important we not allow people to mistake half a loaf for a full loaf. We should phrase things carefully, but at the end of the day I’d rather hurt someone’s feelings than have the public mistakenly believe that the uninsurance situation is improving because of efforts like these.

Rick
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Rick

I did some in-depth analysis of this initiative, and there are six levels of buy-in, ranging from the $59 a month “discount card,” through three other levels of non-risk coverage, to the top two levels, which are, I believe, full-risk, with the top one including major medical. That one will cost up to $329 PMPM depending on your region of the country. These things are being targeted at the part-timers, seasonal employees and independent contractors who were never traditionally offered any kind of coverage anyhow. For the fairly able-bodied who work, but aren’t being offered coverage of any kind this… Read more »

gadly
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gadly

The term “health benefits” is also very broad. A company can still say they offer health benefits while increasing employee contributions, reducing benefits, or offloading dependent coverage. One of the things I hate about the concept of “total compensation” is that the meaning of “health benefits” is not spelled out to potential employees. They only find out what their coverage is going to be after they’ve accepted the job (and perhaps left another job with better benefits). Even if the situation is bad enough for the employee to want to leave immediately, employers know that they have the home field… Read more »