Health insurance costs per family are approximately $15,000 annually. Who can afford to pay them is another matter.
More and more, we're realizing as a society that health care costs are too high. ObamaCare, Medicare, Medicaid and now private sector companies are all trying new initiatives to come to grips with the unsustainable spiral. It somewhat reminds me of the game of hot potato we once played as children. The potato in this case is the excessive costs of health care as it exists today.
Regardless of how we may feel about ObamaCare, going back to the way things were before its passage is not a viable solution either. The trend was bad then, and it's not likely to improve anytime soon. The ObamaCare system will be a very costly one, but so was the prior one.
In an effort to change the impact of health care costs on their operations and the pocketbooks and behaviors of their employees as well, some companies are beginning to implement defined contribution type voucher plans in an effort to bring their health care costs under control.
Big Firms Overhaul Health Coverage tells us what Sears and Darden Restaurants are doing in an effort to control their health care expenses:
"Two big employers are planning a radical change in the way they
provide health benefits to their workers, giving employees a fixed sum
of money and allowing them to choose their medical coverage and insurer
from an online marketplace.
Sears Holdings Corp.
and Darden Restaurants Inc.
say the change isn't designed to make workers pay a higher share of
health-coverage costs. Instead they say it is supposed to put more
control over health benefits in the hands of employees.
The approach will be closely watched by firms
around the U.S. If it eventually takes hold widely, it might parallel
the transition from company-provided pensions to 401(k)
retirement-savings plans controlled by workers and funded partly by
employer contributions. For employees, the concern will be that they
could end up more directly exposed to the upward march of health costs.
"It's a fundamental change…the employer is saying, 'Here's a pot of
money, go shop,' " said Paul Fronstin, director of health research at
the Employee Benefit Research Institute, a nonprofit. The worry for
employees is that "the money may not be sufficient and it may not keep
up with premium inflation." . . .
Darden did say that employees will pay the same contribution out of
their own pockets that they currently do for approximately the same
level of coverage. Employees who pick more expensive coverage will pay
more from their paychecks to make up the gap. Those who opt for cheaper
insurance, which may involve bigger deductibles or more limited networks
of doctors and hospitals, will pay less.
"It puts the choice in the employee's hands to buy up or buy down,"
said Danielle Kirgan, a senior vice president at Darden. The owner of
chains including Olive Garden and Red Lobster will let its approximately
45,000 full-time employees choose the new coverage in November, to kick
in Jan. 1.
Darden says that employees with families to cover will be
given more money to buy insurance than employees covering just
The hope is that insurers will compete
more vigorously to get workers to sign up, which will lower overall
health-care costs. Darden and Sears are both currently self-insured,
meaning that the cost of claims each year comes out of company coffers.
On average, U.S. employers and workers are estimated to spend $15,475
in annual premiums for health insurance this year for a worker with
family coverage, according to a survey by the Kaiser Family Foundation
and Health Research and Educational Trust. The average employee pays
about 28% of that amount and the employer picks up the balance. . . .
Several big benefits consultants and health insurers are betting on
the employee-choice model. . . .
"Within the next two or three years, it's going to be mainstream," said Ken Goulet, executive vice president at WellPoint Inc. The insurer will roll out a product next year called Anthem Health
Marketplace that lets employers offer a variety of its plans to workers,
paired with a fixed contribution. Mr. Goulet said it is close to
signing up more than 30 midsize and large employers for early next year,
including one with more than 50,000 workers.
Other insurers say
big companies will hold back until they see early successes. "There will
be a lot of interest in taking a look at those results," said Yasmine
Winkler, chief product and marketing officer at UnitedHealth Group Inc.'s
insurance arm, the nation's largest. But, she said, "The jury's out" on whether the approach will become widespread. . . .
A spokesman for Sears, which will have around 90,000 full-time
employees eligible for the new health-benefits program, said the
approach "is about increasing associate choice and options for their
health care," and should benefit both the company and its employees.
But some consultants question whether the exchange setups will
achieve overall savings for big employers, particularly those who
already self-insure to shave costs.
Exchange operators today say they offer employers more predictable
costs, as well as potential savings gleaned from workers' voluntary
choice of skinnier coverage and competition among insurers offering
plans on the exchanges.
"It drives competition and drives efficiency," said Ken Sperling, Aon's national health exchange strategy leader."
All this says that health care costs, as is the case with pension costs, must be brought under control.
If employers continue to pay more as a result of ongoing health care cost increases, employees will inevitably receive less in wage and salary increases.
If government spends more on health care costs, both employees and employers will be taxed at a higher rate.
If employees pay more for health care, in their roles as consumers they'll have less money to spend on other purchases.
Simply stated, the current unaffordable costs of our third party payer health care system, both in the public and private sectors, must be addressed and solved.
Otherwise our economy and We the People will continue to suffer as a result of the disproportionate health care expenditures relative to other purchases.
Adopting a "we're all in this together" but MOM based approach instead of the current OPM mindset is the key.
The fact is that health care costs can't possibly be inexpensive if uncontrolled usage is encouraged due to the third party payer fee for service system which has long been in place.