Mercer says that the number of small businesses offering health insurance to workers went down last year despite the greater and easier availability of high-deductible and HSA plans.
Fewer small employers offered health insurance this year, despite
the widespread availability of new, lower-cost high-deductible
insurance plans, a survey released today by benefit firm Mercer shows.
Advocates of the high-deductible plans touted them as one solution to
the growing number of uninsured, expecting the plans to appeal to small
employers, who would continue to offer health insurance as a result.
"That’s not happening," says Blaine Bos, a Mercer partner and one of
the study authors. "In fact, the reverse is happening."The
study of nearly 3,000 employers found that the percentage of employers
with 200 workers or fewer offering any kind of health insurance fell to
61% this year from 63% in 2006.That drop came even as the cost
of high-deductible plans with tax-free savings accounts averaged $5,970
per worker per year. That was $700 less than a comparable plan without
a savings account and far lower than the $7,120 for the average HMO,
the study says.
HSA/HRA type plans are growing in the market, but not as fast as employers are dropping coverage.
about 5% of all workers with insurance have an account-linked
high-deductible plan this year, up from 3% last year. "That’s pretty
significant growth," says John
Goodman, a longtime proponent of health savings accounts and president
of the National Center for Policy Analysis, a non-profit group that
backs free-market approaches to issues such as health insurance."I am surprised it is not doing better in the small-group market," Goodman says.
Goodman’s surprise I think misses the overall
point. The low wage employer who’s been offering insurance on the
margin is struggling because even if they can save 10–15% by switching
to a HDHP they can’t get the major savings individuals can by making
that switch because they’re usually already experience-rated. The only
individuals of course who can get those switching savings are the ones
who can pass the underwriting test–i.e. the ones who aren’t sick.
Instead it’s just cheaper for the employers on the margin to not provide
insurance at all, or to ask the worker to pay for most of it themselves, which amounts to the same thing. So suggesting that we can
make serious headway into the uninsured numbers by getting employers to voluntarily
switch to lower cost plans is missing the point.
The obvious solution that the mainstream insurance industry
is now glomming onto is to have government subsidies take up the slack.
Hence the keen support (from most of them) for something that looks
like the Arnie plan—compulsory pay or play for employers and
individuals, subsidized by the taxpayer, with not much in the way of cost constraint built in.
The WSJ noted exactly that yesterday in a piece called Health reform plans aid industry— In fact it’s so damn obvious that Karen Ignagni manages to comment upon the Presidential proposals without even telling an direct lie!
The industry’s chief lobbyist, Karen Ignagni, president of America’s
Health Insurance Plans, says she is encouraged by the debate so far and
says her group is focused on trying to get universal insurance enacted
rather than stopping it. "At 20,000 or 30,000 feet, we have heard
encouraging statements from Democrats and Republicans," she says.
I suspect however that she’s more encouraged by the Democrats–if one suspects that a future Democratic President will trade away cost-containment in order to get to universal coverage-lite. That would make the plans very happy and get rid of the low-wage employer problem–details to be worked out of course.
And frankly it’s a trade I’d take too. because once the uninsured issue is out of the way, then we can take a real look at how we’re actually spending the money. But if nothing else, the Mercer study shows that if we’re going to fix employment-based health insurance, it’ll be done by the visible hand of government not the invisible hand of the market.