Putting the ‘Insurance’ Back in Health Insurance

….What can be done?

Reforming the system involves, first and foremost, encouraging people to buy insurance for themselves, by eliminating the tax-code discrimination against individually purchased health insurance…..
Comment:  Good article explaining some of the negative impacts of insurance regulations.  The tax code discrimination the journalist mentions is in reference to purchasing individual health insurance without an employer sponsored Cafeteria plan.  Individual health plans purchased through a BetterFits program are pre-tax deducted. 
The good news here is the acknowledgement of a strategy to reform the health insurance finance system. 

Higher Prices Charged By Hospitals, Other Providers, Drove Health Spending During Downturn

…..The findings are based on about 3 billion claims paid by Aetna, Humana and UnitedHealthcare on behalf of 33 million people with job-based insurance nationwide.  The data represent about 20 percent of the people with insurance nationally, but do not include spending for people who are on Medicare, Medicaid or those who buy their own policies.

The report shows that people with job-based insurance “are paying more and getting less,” says Chapin White, a senior researcher at the Center for Studying Health System Change, a nonpartisan think tank in Washington. He did not work on the report……


Comment:  The ugly truth is that as the baby boomers make their way through the age bell curve, they will send every group health plan into a death spiral.  This is a term that the industry uses to describe what happens when there are more people in the old/sick category than there are in the young/healthy category.   As the claims increase and the premiums go up, the young/healthy people find less expensive options leaving the old/sick people behind exascerbating the effect of claims on the premiums until the plan cannot charge enough money to cover the claims and finally collapses. 

One of the major reasons group health plans are now more costly than individual health policies is because the median age of the baby boomers is 57.  There simply are not enough people employed on the younger side of the curve to offset the expenses of those in the age category where poor lifestyle choices manifest themselves.  As this median age approaches 65, the claims and premiums will increase exponentially.

If you think of the nation as one big company with a group health plan, the nation’s plan is in a death spiral.  There has never been a group health plan survive a death spiral.  Some have bought time by restructuring(Healthcare Reform) but the end is always the same.  The plan collapses and leaves those with health conditions uninsured.  In this case, most will end up on Medicaid.  

As employers try to hire new(younger) employees, those internet savvy employees will opt to purchase substantially cheaper individual coverage instead of joining the group health plan.  The employer will gladly facilitate the purchase as it will cost them less which will just expedite the demise of the employer group health plan.  Start saving money today and call Visor about implementing a BetterFits program.  It will never be too late but at least you won’t have to regret not calling sooner.



Responsibilities Shifting for Employee Benefits

Controlling employer costs for healthcare benefits is a top priority among finance executives, according to a new study.

Prudential Financial and CFO Research Servicesfound that 70 percent of company executives are concerned about controlling employer costs for company provided healthcare benefits with 65 percent saying they are likely to shift a larger portion of costs for healthcare coverage to employees.

“The solution seems to be to shift the responsibility from the employer to the employee and in the process giving employees more authority, choice and a wider range of coverage options at a lower price,” said Sam Knox, director of research for CFO Research.”

Employee choice programs include voluntary and flexible benefits. In an employee-choice model, each employee is provided with a fixed amount of funding for benefits and employees select their benefits using those funds as well as their own funds.

Today, only 15 percent of respondents describe their current program as an employee-choice strategy.


Comment: In the past, the only firms that could possible implement an employee-choice strategy were very large employers with many thousands of employees.  With the regulation change in 2007 that allowed the pre-tax deduction of individual health policies, any size firm can now take advantage of this budget saving strategy.