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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  1. 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!

  2. 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 on a limb with her 3-Share health insurance program that is in violation of state and Federal laws. These laws protect the consumer and she doesn’t care about sick workers and cancels their insurance without COBRA extension. Good luck to her in her election next year.

  3. 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 appropriate state regulators to sanction or prosecute as need be. Feelings don’t really need to come into it one way or the other.

  4. 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.

  5. 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 Medical” – “REAL INSURANCE” – and “Employer Based” insurance, just – “Health Benefits,” because you lose employer based coverage if you get too sick to work or get fired (I think this guy is reading my stuff at this blog). He says “Employer Based” family insurance is $14,000 in 2006 and “Individual Medical” is half price at $7,000.
    The truth is like Katrina, it blows the propaganda away. In the real world I enrolled a family of 5 last night and dropped their cost from over $900 a month to just over $300 a month. This was in metro Detroit and they had a COBRA from Ford Motor Company. This Paul Zane Pilzer is a little confused because he says CA has the lowest individual health insurance rates. If this family moves to LA their premiums will more than double up. I know, our insurance company is in both states. Also yesterday, I enrolled a very important person on a tax free HSA. In 24 months he will be the strongest voice in America on the Ownership Society. He is a steadfast “Change Enabler” or Z-Truth. He will be Save101.com most famous client in the future. When he gets “Federal” health insurance I will advise him to leave his children with us so that they will have “Real” insurance that they can keep if they get sick or hurt.
    Also yesterday it is being reported that Governor Jeb Bush enrolled in a tax free HSA. Jeb is quoted as stressing the “Portability” of the HSA. My new client has much better health insurance than Jeb’s because my client has a “dependent conversion priviledge” and Florida’s health insurance for state employees doesn’t. My client’s tax free HSA is better too because his HSA is paying 6% interest and Jeb’s is not. But it’s nice that a millionaire like Jeb has gone tax free with an HSA to set a good example for all Americans.
    Governor Granholm was the Chair of the National Governors’ Association Healthcare Committee in Des Moines. She said the government should adopt her 3-Share program. This 3-Share program is buying advertising in Detroit so I called them. Insurance must be “employer based” and a couple pays $112 a month and the employer pays the same along with tax payers. On the phone the enroller told me that the employer just terminates the health insurance if an employee on 3-Share is too sick to work. I don’t know how Governor Granholm’s 3-Share program can violate Federal COBRA laws but I do know the advertising is breaking Michigan state law by listing benefits and not the insurance company’s name. Governor Granholm is way out there on a limb with this 3-Share program. I was told on the phone that the maximum benefit is a pitiful $35,000. We have HSA insurance for a couple available for only $70 a month for a 30 year old couple in the 481 zip code with a lifetime maximum benefit of $2 million, per person, on covered expenses. This cannot be duplicated on government insurance which always sucks for the consumer. This cannot be duplicated in CA either, otherwise I would be in CA instead of MI. MI has the lowest HSA health insurance rates in America. The next Governor of MI should say, “Move your business to MI and enjoy the lowest health insurance rates in the USA.” Instead, the Detroit Free Press runs articles everyday about the automakers’ finacial burden of employer based overpriced health insurance and editorials calling for Socialized Medicine.
    We have old commercials that said, “A storm is coming, Reform is coming,” and “The MSA is the bright, white light, before the shockwave of reform.” But we have always said, “Reform has begun, at Save101.com.”
    Also yesterday, I saw our insurance company running TV commercials in Detroit. They don’t even mention HSAs. The commercial ends with three kites flying and coming together to form the logo, it’s beautiful.

  6. //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

  7. 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.

  8. 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 is a chance to get into a pool without concern about preconditions, and have the premiums deducted from their paycheck. Nothing more, nothing less. On balance, it may be a better deal than the individual market. Maybe not. Each person has to figure that out for him or her self.
    The creators of this initiative at the HR Policy Association have been upfront with me in saying that this is not meant as a broad solution to uninsurance. At best, I predict they’ll get 1.5-2 million to sign up. Not a big chunk of the 45.6 million uninsured, but a chunk nonetheless.
    Matt, your criticisms are all correct, and I’m on board with the notion of bigger pools and elimination of cream skimming to eliminate uninsurance. But that will take some big-time, top-down political leadership, which is not coming in the short run. So for now, we’ll have to make do with some well-meaning people, doing what they can with the cards they’re dealt.

  9. 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 advantage. It takes a lot of work to find another job, and employees will bear the stigma of “job-hopping”. I think companies should have to publicly display the terms of their health benefits so employees can make a more informed choice before they accept a job offer.
    Ps. HR people are evil. Most employees expect HR to uphold company policies and advocate for them at least as far as upholding company policy goes. However, I recently read an article where an HR manager “explained” his/her job was to please their employer, and that the poor employees are just stupid/deluded to believe HR would advocate for them. In my own experience from Kaiser, HR has no qualms about destroying evidence and only conducts phony grievance procedures to create delays (reducing the chances/effectiveness of a lawsuit) and to build a case to justify whatever management has done. This is a profoundly unethical way to make a living.

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