The nation's large self-insured employers are beginning to abandon their health benefit programs

[eridani]

http://online.wsj.com/article/SB10000872396390444549204578020640220260374.html

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."

Comment by Don McCanne of PNHP: Many larger employers have said that they do not want to be the first to initiate major structural reforms in their employee health benefit programs - reforms that would bring the employers relief but at a cost to their employees - but that they would quickly follow others out the door. It looks like the door has opened.

This is a very fundamental change in employee health benefit coverage. The Affordable Care Act relies heavily on self-insured large employers maintaining their coverage of a large percentage on America's workforce, so that the Act can concentrate on lower-income and uninsured individuals. Under the radical change described in this WSJ article, employers will discontinue their self-insured programs and switch to a defined contribution - a specific dollar amount that employees will use to shop for health plans in these employer insurance exchanges.

There has been considerable discussion recently over converting Medicare to a defined contribution - premium support or voucher program - in which the costs to the government would be fixed to some index of inflation, whereas the greater increases in health care costs would be borne by the Medicare beneficiary. Thus health care would become less and less affordable, especially for those with greater health care needs.

With this move by employers, they are putting in place the same perverse defined contribution approach which we have determined would be so destructive to our Medicare program. And, oh yes, the benefits consultants and health insurers are jumping in to draw off even more health care funds in administrative costs - already one of the greatest burdens in our health care system. The executive vice president of WellPoint says, "Within the next two or three years, it's going to be mainstream."

Further, as was reported in yesterday's Quote of the Day, over 90 percent of individuals do not select the Medicare Part D drug plan that would be best in their individual circumstances. It shows that health insurance shoppers really do not know how to shop for health insurance. Obviously comprehensive health plans are much more complex, and it would be virtually impossible for individuals to select the best plan, even with the language of simplified plan descriptions called for in the Affordable Care Act.

In fact, several studies have shown that most individuals select plans based primarily on the lowest net premium, with very little attention paid to plan benefits and cost sharing. The most common strategy for insurers to keep premiums low is to use large deductibles and coinsurance, though they also manipulate benefits and provider networks to reduce costs. Besides the increasing deductibles, coinsurance is particularly a problem since it is a percentage of the charges rather than a dollar copayment which is usually much smaller. Low premium plans tend to set coinsurance rates at very high percentages. As this article states, the savings will be dependent upon "workers' voluntary choice of skinnier coverage." It's all the workers'fault!

It is likely that the initial defined contributions will be fairly close to the amounts that employers are currently paying for the health benefit programs, so the immediate impact will not be transparent. Only after many employees face bankrupting medical debt - a phenomenon that will increase as the employer contribution buys ever less insurance - will the implications be clear. It is tragic that so many will have to experience financial hardship before we are ready to get serious about fixing our system by enacting an improved Medicare for everyone.

Haven't we had enough policy discussions to understand what is happening? Why aren't we doing anything?

By the way, just in case you didn't get the gist of today's message, OUR NATION'S LARGE SELF-INSURED EMPLOYERS - THE MAINSTAY OF HEALTH CARE COVERAGE IN AMERICA - ARE BEGINNING TO ABANDON THEIR HEALTH BENEFIT PROGRAMS AND SHIFT THE RISKS TO THEIR EMPLOYEES.

[HiPointDem]

1. As predicted, & entirely predictable. K&R. And I'll guess what some of the fallout will be

(besides the obvious tiered healthcare services): job loss in the healthcare sector.

Healthcare was a large part of the "services" economy we got in exchange for "free trade" and the offshoring of the manufacturing sector. It's going to go away too.

[B Calm]

2. I figured this would happen. First

they'll blame Obama, then people will start demanding Medicare for all!

[eridani]

3. I'd rather start with that second part myself n/t

[B Calm]

5. Nothing good ever comes easy!

(So the old saying goes)

All good things are difficult to achieve; and only bad things comes easy.

[ChazII]

31. Agree 100% n/t

[Amak8]

4. Ryancare coming early

[xchrom]

6. Du rec. Nt

[antigop]

7. we've been discussing this on a previous thread

http://www.democraticunderground.com/?com=view_post&forum=1014&pid=247290

[eridani]

9. I was mainly emphasizing the McCanne commentary n/t

[antigop]

10. and a lot of McCanne's points had already been brought up by DUers on that thread n/t

[graham4anything]

8. this is very badly titled and very misleading article

looking to blame the greatest president this world has seen since LBJ left office.

another smear on Obama.

yawn.


btw-those who are self-emplOYED people the last decade or so, can't have the best options as the top notch insurance for a family of 4 PER MONTH would top $8000 a month
($100,000 a year) AND HAS BEEN THAT FOR YEARS.(for level D coverage of family with a large amount needed before it kicks in)

Obama's plan doesn't start til 2014 btw.

[Selatius]

11. Well, the silver lining is that this might provide the impetus for a second round of reform.

A LOT of people said that once ACA was locked in, that it would be final.

If the screws are turned tighter on the American people, there will be support for a second round of reform down the road, perhaps as little as ten years and possibly less.

[graham4anything]

15. we can hope. That was sort of the idea Obama had to get it started

without one step forward, you can't get that second step ahead

once forward movement starts, anything is possible

10% of something is better than 100% of nothing and that 10% seed grows a vast garden of good things in the future

(as long as a democrat is in office and the more the merrier in the senate and house and SCOTUS to insure it keeps moving forward.)

It is why the whiners against Obama were so wrong while this was happening.
(Even Bernie Sanders and Kucnich knew this to be true, much as they wanted more)

As Abraham Lincoln stated, “We could not secure the good we did secure if we grasped for more".

[eridani]

13. They'd be doing it regardless of ACA

All part of the grand race to the bottom.

[Doctor_J]

16. It's from the Murdoch Journal

and catapulted by a "Dem"

[Honeycombe8]

12. I don't know about the other co., but Sears is in trouble financially, so that's probably what that

is about.

Self-insured? As in...they don't buy a group policy from an ins. co.? They self-insure? So it sounds like Sears has been anti-insurance company for many years.

I hope this isn't a trend. It COULD be a good thing at first. But if it's like the 401k, that's not great. The article says 401ks are partly contributed to by employers, but that's not always the case. I recently changed jobs and found that employers varied a lot in what they provided for 401ks. I got a job offer from a company with a 401k. I asked how much they contributed. They contributed NOTHING. What's the point of providing a 401k, then? It prevents you from opening an IRA, is all that does (if I understand teh rules). Another company contributed 1 1/2 % matching. Another company contributed over 1 - 7%, depending on tenure...it was a contribution whether the employee contributed at all or not.

Ins. benefits are getting to be that way...from employer paying for the whole premium, to employee having to pay part of it.

PROSPECTIVE EMPLOYEES, AND CURRENT EMPLOYEES, NEED TO ASK THESE QUESTIONS OF EMPLOYERS. I was shocked when I asked around at my new employment what people thought of the 401k plan...I was shocked that few people I asked even participated, knew anything about it, and definitely DID NOT KNOW WHAT THE FIRM CONTRIBUTED, OR IF IT CONTRIBUTED AT ALL.

I did not take the job from the company that didn't contribute at all to the 401k. Thankfully, I got another job offer, where there was at least a small matching contribution. It says a lot about a company, when it doesn't care enough about it's employees to provide ANY sort of retirement benefits. They probably think just having a plan set up is contribution enough. IT ISN'T.

[eridani]

14. It is exactly like a 401k--a switch from defined benefits to defined contribution

That would be good for the 85% who will never get expensively sick, but hell for the sick minority.

[Gormy Cuss]

25. Large companies almost always find it cheaper to self-insure.

Their pool of participants is large enough that they can manage the risk effectively while still providing good health care benefits. This shift to cash payments to workers will make it even cheaper because now the company has NO risk and complete control over costs of this benefit. Workers will get screwed unless they have the time to take on another new job, namely understanding complex health care plans in order to make an informed choice.

Just like the pension to 401K, it's sold as empowering workers but what will happen all too frequently is that it will leave the employees at a disadvantage.

BTW, the point of a 401K without employer contributions is that you are offered specific funds for investment rather than having to go find them on your own and also if your income is large enough a 401K allows you to defer taxes on more money annually than an IRA would. As for employer matching it's actually quite common to have no employer contribution (nearly half in 2010 according to the National Compensation Survey.)

[Native]

17. kick

[bluestate10]

18. Like every thing. The plan has pluses and minuses.

If I were given $5,000 per year, I would end up saving most of it after health insurance and medical expense payments because of my low health-care needs. But if a person that is not healthy is given the same $5,000, that person's well being would depend on the quality of health insurance that he or she has. The best system would have a person like me giving up the gain that I would get to help fund the expenses of the sick person.

I don't agree with your conclusion. As AC takes hold, insurance exchanges will be set across the country, one feature that I would like to see changed in the ACA is to allow exchanges to operate across state-lines. Even if the state-line restriction is not removed, ACA is designed to develop exchanges in each state that are tailored to the needs of that state's citizens and are roughly equal state to state. My state is one where preventative care is big and a large percentage of citizens are fit. My state's exchange setup would be different from that for Mississippi, given that state's chronically overweight population and poverty.

[Honeycombe8]

19. $5k won't buy an ins policy for a year. Not a decent one. My state won't have exchanges...

TX will not allow them. I hope that means the companies won't go to this "you're on your own" plan. If they do, a lot of people will drop into the uninsured world.

Maybe $6,000 to $8,000 would buy a decent policy. (these won't be subsidized under ACA)

Firms have been pushing the Health Savings Accounts plans in the last few years. The deductible keeps getting higher and higher, making them not cost effective. It's sort of like not being insured up to a point. But the ACA will soon make those inpracticable to be sold for some reason. Maybe it's the 85% rule. Those plans don't meet the 85% rule, I think. I haven't opted for that, since I can't figure out under which plan I'd be better covered. It's so iffy, requiring so many assumptions just to compare them. That's intentional, of course. If Health Savings Accounts were clearly better for you, it would show up in a simple comparison. The fact that it's so close tells me the deductible is too high.

[ellenfl]

34. if the state opts out, the federal govt steps in and sets up the exchange. eom

[Honeycombe8]

35. I didn't realize that. I looked it up, and apparently that's true. Yay!!!!

I can't believe the idiot governor turned down the Medicaid expansion and the funding. Linked to that was a rejection of the exchanges. But you are right that the ACA requires exchanges, so the fed will do them. This is good news.

[ellenfl]

40. i'm looking for the exchanges to morph into single payor/medicare-for-all.

i expected employers to drop coverage. they were upping employees costs before aca. my hope is that the aca ptb anticipated that big business would eventually push us to 'socialized medicine'.

ellen fl

[DainBramaged]

20. Where I work, three years ago when we were bought out, employees paid about $39 a week

for benefits (single) $110 family.


Now, $142 a week single and $330 family. And EVERY year since we have changed plans and had coverage reduced while paying more. Our latest plan is an insult. We pay a $500 co-pay for emergency room (up from $100), we pay $500 a DAY co-pay (up from ZERO) when hospitalized. MRIs were $100 co pay, now 20%.


We are so fucked. This shit is the tip of the iceberg throwing the employees overboard for the sake of the investors.

[glowing]

21. Why should jobs pay for people's health care in the way that it is currently given?

The prices are increasing more and more every year. Its a huge cost drag. It's something the govt as a whole should take care of thru taxing business, wealthy, and payroll based on income of family. Once everyone is in 1 pool, Medicare will have a chance at becoming solvent as younger working families pay more in than they take out, while knowing in their golden years, they will be taking more than replacing in costs. Then regulations across the industry could become more uniform... We still have a hodge podge of price differences, private/ public/ non-profit hospitals and individual offices.

Its time for the health insurance industry to find another item to insure.

[gulliver]

22. Divide and conquer. We need single payer.

End all the hassles. Single payer is the way to go. If you get sick, you go to the doctor. Done.

You don't have to worry about red tape. You don't have to worry about reading through piles of options and programs, all of which have hidden clauses deep in the fine print. You don't have to worry about bargaining as a solitary individual with a giant insurance company. You don't have to worry about billing mistakes that always, for some reason, seem to be in the insurance company's favor.

[lonestarnot]

23. Yes we do.

[leftstreet]

24. +1

[truebluegreen]

42. +1000

[aquart]

46. Yes. Healthcare should never be tied to employment.

And I look forward to those big companies realizing too late what a hand up they've given their young and hungry competitors.

Now, how are the rich, fat insurance companies going to deal with this?

[riderinthestorm]

26. One in ten businesses set to drop their health care coverage this year

Boy have I been flamed for this earlier when I've posted it - called a RW troll, shill and worse. This trend was a no brainer. The only silver lining is that perhaps it will squeeze companies enough they will put on major pressure for the Admin to take the next step and create a public option (or maybe even single payer? A girl can dream.....) The short term however will be quite painful. If enough middle and upper management folks begin to experience the insurance nightmares that some of the rest of us have been facing, it may help to spur desperately needed reform.

From a study done by Deloitte:

"But around one in three respondents said they could decide to stop offering health coverage if they find that the law requires them to provide more generous benefits than they do at the moment; if a tax on high-cost plans takes effect in 2018 as scheduled; or if they conclude that the cost of penalties for not providing insurance could be less expensive than paying for benefits.

Penalties for not providing health benefits after 2014 start at $2,000 per worker for companies with 50 or more full-time employees. Most companies already spend thousands of dollars more to cover each worker, although those costs come with tax breaks and can also reduce the wages that employees expect.

The study, conducted between February and April, surveyed corporate and human-resources executives from 560 companies currently offering benefits, Deloitte said. Companies weren't named in the report. The survey was done before the Supreme Court ruled to uphold the overhaul law in June. The firm said it doesn't believe that affects the results, as most employers didn't seem to expect the law would be voided."

http://online.wsj.com/article/SB10000872396390443437504577545770682810842.html

[Zalatix]

45. You and I both.

[madrchsod]

27. it really is simple...medicare for all.

i know the devil is in the details but the rest of the industrial world seems to have figured it out.

[jeff47]

28. This isn't a bad thing.

We need to separate health care from having a job. That's the point of the tax structure in the ACA - it reduces the incentives to businesses to provide insurance and thus pushes more people into the exchanges. Where we can get public options that lead to single-payer.

[dkf]

30. Yeah so deliberately make things worse til it all collapses so you can rebuild?

Why do the ACA then? We would have got there anyway.

[jeff47]

33. Because it isn't making it worse.

The exchanges are better for most people than employer-provided insurance. For example, they actually have a choice between plans. You don't get that from the vast majority of employers. You get the one plan that provided the best whores to the CEO. Plus the ACA provides various financial help to make the plans affordable. I know when I worked retail the "employer-provided" insurance was a joke - it would consume 80% of a paycheck. But according to this OP, that's what we should fight to keep.

The point of the ACA is to provide the framework in which we finish health care reform. Without that framework, it would have to get much, much, much worse before there was enough national political will to enact single-payer. The exchanges and the ACA greatly shorten that path with a lot less suffering.

[Zalatix]

44. "Because it isn't making it worse"? If you earn just $20K a year THIS RAISES YOUR living expenses by

$81 a month!

That's going to fuck up a LOT of people.

edited to add: humans will go extinct before Medicare for All happens in America.

[jeff47]

52. If you earn $20k a year, you had absolutely no chance of buying health insurance before.

The various aid programs make it far more affordable.

And if you still can't afford it and get sick, you can buy insurance for one month since there are no pre-existing conditions. That's much better than the old system, where you just had to go without medical care.

The ACA is much better than the old system. But it's not the end of health care reform.

[dkf]

29. This was so obviously coming. Healthcare costs are out of control.

Bah the ACA was such a waste of time in the larger scheme of things.

[mick063]

36. Agreed

The confrontational debates about "Obamacare" are rather pointless.

As long as Health Care costs rise 20% faster than inflation, there is no means of insurance, public or private, that can meet the needs of the American citizen.


The government needs to implement prices freezes on health care. This is the root of the problem.

Stop and think about it.

You can buy a nicely equipped new car for 30 grand. You can spend a night in intensive care for 30 grand. It took more labor, equivalent research and development, more logistics, and more infrastructure to build that new car.

We are getting collectively scammed by health care providers, yet people seem to be always pointing their collective fingers at the insurance institutions.

[bhikkhu]

38. ...and the existing regimen of cost-sharing/cost-avoidance has been a part of the problem

Cost increases have slowed for the last two years, so its not correct to look at the OP as a sign of an accelerating problem, but for the previous 15 years the whole dysfunctional mess has led us to where we are today.

The ACA should completely change the dynamic behind the cost increases, which is the most important thing.

[dkf]

48. Except employers are going to drop it faster than its going to change things.

Most middle income people get more from employers than the government will subsidize. This will hit middle income people who aren't eligible for the exchanges until their employer drops them and then they are stuck with the difference.

And the companies will blame it on Obama but I guess that won't matter because he can't have 3 terms.

[B Calm]

39. Because of republicans we got ACA

instead of Medicare for all!

[dkf]

50. Yes, and we didn't even add a public option. Ridiculous.

[socialindependocrat]

32. Every time my company made a change it was for their benefit

Retirement plans:
We changed from a noncontributory plan that we could not touch and could not transfer. They said - we don't want employees for a full career. I said no problem, just give us a portable pension plan. They said if we did that too many people would leave the company.
The pension was also end-weighted - meaning you gained 40% of your pension during your last 8 years of service.
Then they switched to the 401K - Now the new people can use the 401K for their pension. Say you accumulate $600K and you take $50K/year. Your money will last for 12 years. How long do you think you're going to live?
Medical Insurance:
They used to take more money from the employees to subsidize the insurance for the retirees. Then they saids the retirees use more insurance and they will pay their own premiums and the employees will not pay extra to go toward the retirees. The retirees paid more but did the employees rates get lowered? NOPE!

They cut general benefits over the years. Cut travel expences.

They gave nonexempt employees exempt status so the company wouldn't have to pay them overtime (You IT people know what I'm talking about!!)

They started deductables so we have to pay $850 per person before we collect from the insurance plan

and the give the CEO $7M in bonuses for doing such a good job

Who fights for the workers? NOT A DAMN SOUL

Elizabeth Warren would have but they blocked her from heading
her organization. Now why would "THEY" vote against protecting people when we elect them as a voice for "We The People"?

Obviously - "THEY" are not our voice!

SO, What do we elect them for?

So we can pay them $180K a year to screw us?

And the Repukes want to elect people who will give more money to the wealthy.

Dumb and dumber...

[jwirr]

37. This was happening before HCR. It is just continuing now.

[taught_me_patience]

41. Two shit companies circling the drain n/t

[Zalatix]

43. I warned people about this, too.

Let the flames begin.

[lovuian]

47. Universal Health is on its way

America can't compete with other nations with socialized medicine

the Companies want out of Pensions and health benefits

the Government is going to have to step in

if we don't the Workers will revolt and Demand it ...the Democratic Party and Republican Party better WAKE UP

Capitalism is DEAD

[SmileyRose]

49. I see this as a good thing

Both of these companies will go out of business eventually. Shifting people over to the exchange is a good thing. Single payer would be better.

[2Design]

51. nothing new - they have been doing it for over 20 years with outsourcing

most of the former employees have no healthcare now - jobs went off shore -

shows the trickle down does not work - greed only

[Sen. Walter Sobchak]

53. I'm not even convinced an employer healthcare mutiny would be bad thing

I don't see how we completely get away from status quo and to universal healthcare without the current system burning to the ground.