Employers could save billions by dropping workers from health plans, report show

[TechMan]

http://www.foxnews.com/politics/2012/05/01/employers-could-save-billions-by-dropping-workers-from-health-plans-report/?test=latestnews

Republicans on the House Ways and Means Committee surveyed the top 100 companies about how much they spent on health care -- a total of 71, covering 5.9 million employees, responded. The results suggested it would be far more attractive for companies to drop workers from those plans than keep them.

Even after paying a penalty of $2,000 per employee, the companies stand to save $28.6 billion in 2014 alone by shifting employees to health insurance exchanges governed by strict federal standards. The companies stand to save more than $422 billion over the first 10 years of the law by doing this.

So here we go....It will be interesting to see if any of the Fortune 500 companies would do this.

[Tallpine]

What a surpise ... 

[AmbulanceDriver]

http://www.foxnews.com/politics/2012/05/01/employers-could-save-billions-by-dropping-workers-from-health-plans-report/?test=latestnews

So here we go....It will be interesting to see if any of the Fortune 500 companies would do this.

Sorry, you've got that backwards.  It will be interesting to see if any of the Fortune 500 companies *don't* do this.

[lupinus]

Just our of curiosity...

Haven't they been able to save billions not offering health insurance since the inception of employer paid health insurance? Especially now and in years past where there was no fine for not offering it?

[just Warren]

So the corporations save a bunch of cash and the Democrats pick up a bunch of resentful, needy voters?

[BridgeRunner]

Just our of curiosity...

Haven't they been able to save billions not offering health insurance since the inception of employer paid health insurance? Especially now and in years past where there was no fine for not offering it?

This was my thought.

Not sure where the news is in this.  Or the politics, for that matter.

[Monkeyleg]

The move to a government-run single-payer plan is moving along as planned.

[drewtam]

Just our of curiosity...

Haven't they been able to save billions not offering health insurance since the inception of employer paid health insurance? Especially now and in years past where there was no fine for not offering it?

Yes and no.

Yes, because strictly speaking you're right, they never had to offer healthcare in the first place and it would save some money.

No because...
Medium to large employers have numerous and significant tax incentives to offer the benefit. This is a big reason why they can buy it for the employee much cheaper than an individual can.
This leads to employees which actively seek employers who offer the benefit...
From the perspective of a job seeker:
       offer from company A is $10/hr and no benefit
       vs
       offer B @ $8.50 /hr w health insurance, etc

To the employee, offer A is actually less money because the health insurance is >$2/hr for a family.
To the employer, the cost is only $1/hr. So company B can get an equal quality employee for $0.50 cheaper. That becomes competitive advantage and after a decade every employer will offer it.

[drewtam]

I don't entirely understand the complex scheme of the new system, I don't think anyone does. Which is part of the problem with it.

But it seems that all individuals are subsidized (sort of) to buy health insurance and penalized if they don't.

Therefore the tax incentive to seek employer based insurance is reduced, maybe, I think. If that is the case, its a good thing. The reshuffling of the market to individual purchase will be painful, if that is what happens.


I think this may be an opportunity to continue to shift to an individual purchase system, remove the unconstitutional mandate, reduce the tax subsidies and keep a national market standards system. That would be a productive pivot and improvement even over the old system.

It seems a lot of the problems is caused by federal law in the first place. Since hospitals don't have a right to refuse service, it drives a lot of wrong behavior that these even more complex laws try to solve by making it worse.

[RocketMan]

The move to a government-run single-payer plan is moving along as planned.

This is correct.

[lupinus]

The point of my question is simply that there is no requirement now to offer insurance. They do it as a benefit/compensation.

I'm failing to see why, as soon as there is a fine incurred for doing so, companies will flock to drop that benefit that they are already offering of their own choice and take the fine for no benefit gained by offering it as part of their employees compensation.

The only thing that comes to mind is the thought that premiums will go so far through the roof that companies will simply choose to incur the fine and not offer the insurance. Seems more likely that they;d just push a higher percentage of the premium on the employee as premiums rise, then drop it all together and take a fine while loosing that aspect of what they are offering for employee compensation. 

[drewtam]

The point of my question is simply that there is no requirement now to offer insurance. They do it as a benefit/compensation.

My point is they only offer it as a benefit because it is a gov't distorted market.

If the new law distorts the market beyond its current pretzel shape, who knows where it will actually fall out. But I am afraid your analysis is correct, premiums for everyone will go up (either directly, through taxes, or debt). Maybe enough to switch the market back from employer based to individual based.

I really don't like the employer based model.

[De Selby]

My point is they only offer it as a benefit because it is a gov't distorted market.

If the new law distorts the market beyond its current pretzel shape, who knows where it will actually fall out. But I am afraid your analysis is correct, premiums for everyone will go up (either directly, through taxes, or debt). Maybe enough to switch the market back from employer based to individual based.

I really don't like the employer based model.

The problem with the individual model is that when you have a coverage dispute and a bad illness at the same time, you get no leverage with the ins co.   Also, if you're not sick but are at risk, it's impossible to negotiate coverage at a an affordable rate.

The market for healthcare naturally makes it unaffordable to the people who need it most - you have very little bargaining power when, for example, the alternative to mirtgaging your house is to die of something.

Free markets are incapable of providing affordable services in those circumstances.

[BridgeRunner]

I really don't like the employer based model.

It is the sole reason I am pursuing regular full-time employment rather than continue to do intermittent temp work and develop a small business of my own on the side.  I simply cannot obtain affordable health care for my family without relying on an employer to provide it. 

Incidentally, my preferred path would be much, much better for my children, as I would be able to spend a lot more time with them and could eventually be able to home-school.  But the FedGov has distorted the market so much by its encouragement of the employer-based model that do that would be to risk financial risk and/or death.  Why do conservatives want to encourage a system that prevents entrepreneurship?

Of course, Obamacare attempts to entrench that model further.  This is why, despite my staunch position of being moderate in most things, I strongly favor a socialist national health-care policy.  Few things stifle opportunity and social mobility in the US today as much as our current health-care model, and Obamacare is the bastard child of the Democrats and the health-insurance lobby, which makes it pretty much evil, with a couple helpful things tacked on.

[zahc]

Free markets are incapable of providing affordable services in those circumstances.

Which, to a free-market true-believer, means that those circumstances lead to more expensive services, and that's just life, sorry, and the only way to proceed is to rely on charity (preferred) or on the government taking other people's money to subsidize your situation.

The free market has its own "death panel" and always has...it's infinitely expensive to keep someone alive forever.

[sumpnz]

The problem with the individual model is that when you have a coverage dispute and a bad illness at the same time, you get no leverage with the ins co.   

That's largely becuase of govt regs that make it VERY hard to sue an insurance company for failure to pay for a covered service.

Also, if you're not sick but are at risk, it's impossible to negotiate coverage at a an affordable rate.

So, insurance shouldn't be allowed to price in risk?  Try telling that to your auto insurance company after you've been at fault in a major accident, or life insurance company when your cholesterol is 250, or your homeowners insurance when you buy a house in a crime ridden neighborhood.

The market for healthcare naturally makes it unaffordable to the people who need it most - you have very little bargaining power when, for example, the alternative to mirtgaging your house is to die of something.

So, if I were to have stage 3 cancer a health insurance company should be forced to take me on when I haven't been a customer before, why?  And I might point, we all die of something, eventually.  What makes you (the collective you, not, necesarially, you specifically) so special that you shouldn't have to spend your accumulated assets to prolong your life when you didn't take the responsibility of buying and maintaining an insurance policy?

Free markets are incapable of providing affordable services in those circumstances.

If we had anything even remotely resembling a free market in health insurance and still had all the problems, I might be able to see your point.  Given the market conditions we actually have?  Not so much.

[Monkeyleg]

I'm failing to see why, as soon as there is a fine incurred for doing so, companies will flock to drop that benefit that they are already offering of their own choice and take the fine for no benefit gained by offering it as part of their employees compensation.

Because the penalty is now (emphasis on the word "now") much less costly than commercial insurance. Employees get .gov insurance, and the companies pay far less than before, or at least in the short term. Long term, they'll pay so much their noses will bleed.

[HankB]

Well, my employer announced a while back that retiree medical insurance was going to be curtailed for anyone retiring after 2013. Then - after Obamacare passed - they announced that all retiree medical - for both future AND CURRENT retirees was being eliminated; there would be "some" financial stipend to help retirees purchase coverage on the Obamacare exchanges, but the bottom line is the company isn't living up to decades of promises.

Next time he's in town to address the workforce, I'll ask the CEO a question - "While we can't predict the actions of the Supreme Court with certainty, if they throw out Obamacare, will the changes to our company's retiree medical insurance stay in place even if the stated reason for the changes goes away?"

[Ron]

Instead of the employer based model or a full on socialist model I'm in favor of a more free market style system.

The idea of insurance co-operatives needs to be revisited.

This allows consumers to be in a better bargaining position with the insurance companies and allows the insurance companies to still pursue profit.

Speaking of insurance companies, there needs to be serious investigation into whether the industry has devolved into a monopoly cabal. For all practical purposes I think there are only three or four health insurers insuring the vast majority of the nation. As one can imagine, they have a lot of lobbying clout.

What role government regulation of the market is playing in the concentration of market share needs to be looked at. The market needs to be opened up so more firms can compete. 

http://factcheck.org/2009/09/retraction-health-insurance-market-concentration/

  

[makattak]

Seems everyone is forgetting another part of the calculus in the decision for companies.

The mandates in Obamacare necessarily dictate that the price of insurance premiums will increase. (And we have already seen the beginnings of that increase.)

So, not only is the penalty less than they are paying now, the price they will be paying in the future will be even higher than the penalty. So, even if their incentives to drop insurance for their employees do not exist today, the "FREE STUFF!!!" that Obamacare promises will eventually move their incentives to dropping the insuance.

This is, of course, by design.

[brimic]

Just our of curiosity...

Haven't they been able to save billions not offering health insurance since the inception of employer paid health insurance? Especially now and in years past where there was no fine for not offering it?

Now 'forward thinking' Ivy League MBA CEOs will have a good justification to cut benefits allowing them to pocket a huge bonus while destroying the morale of their fiefdom.

Also consider the scenario with the TARP funds and the banking industry- the big banks were the first in line with their hands out, then they pressured the rest of the industry to take TARP as well under the justification that if a bank is eligable for TARP, its a well regarded bank by the government.

[De Selby]

That's largely becuase of govt regs that make it VERY hard to sue an insurance company for failure to pay for a covered service.

How do government regs do this???  It's a contract.  Lawsuits are expensive and time consuming for all contracts.  It's also hard to sue when you're bankrupt and dying, which will limit the impact of lawsuits no matter what.

So, if I were to have stage 3 cancer a health insurance company should be forced to take me on when I haven't been a customer before, why?  And I might point, we all die of something, eventually.  What makes you (the collective you, not, necesarially, you specifically) so special that you shouldn't have to spend your accumulated assets to prolong your life when you didn't take the responsibility of buying and maintaining an insurance policy?

If we had anything even remotely resembling a free market in health insurance and still had all the problems, I might be able to see your point.  Given the market conditions we actually have?  Not so much.

Notice the contradiction - on one hand you're saying it's perfectly fair to bankrupt people for medicine, but on the other, claiming that you'd see the point if in a free market health care were still expensive.

There are systems where you can get cancer treatment without going bankrupt.  The difference between those systems and the US model is that they aren't privately administered.   

Here all long I thought the point of markets was that they're more efficient - why is our medicine more expensive than any other place in the world, even though it is more market oriented than any other developed nations's?

[dogmush]

Here all long I thought the point of markets was that they're more efficient - why is our medicine more expensive than any other place in the world, even though it is more market oriented than any other developed nations's?

Among other things:

Higher malpractice costs (Both suits and insurance), Higher R&D (because we subsidized the price fixed medicines you enjoy), Irrational end of life care for many folks(Dying folks in the US often spend hundreds of thousands of other peoples dollars to live in a coma for a few weeks.  My wife's an ICU nurse, and could tell you more about this), Irrational use of insurance for scheduled care (Why should my insurance cover an annual checkup?) and the ever present excessive .gov regulation of the industry.

And what do you mean we?  You aren't a part of the US healthcare system.

[De Selby]

Dogmush, why do drug companies sell to other countries at rates that aren't profitable???  I find it hard to believe they're just eating those losses as a charity and making it up on America.  Something tells me there's a commercial reason they sell to countries besides the US...

I'm an American, so that's what I mean by "we."

[roo_ster]

Dogmush, why do drug companies sell to other countries at rates that aren't profitable???  I find it hard to believe they're just eating those losses as a charity and making it up on America.  Something tells me there's a commercial reason they sell to countries besides the US...

I'm an American, so that's what I mean by "we."

Because the gov'ts got the guns, when you get down to it, and the drug companies don't.

OK, here is some detail:


1. DrugCo develops DrugX, a revolutionary treatment for the world-wide bane of ear-worm infestation.  

2. To recoup R&D costs for successful DrugX before the patent runs out (and everybody & their brother can produce generic copies), R&D costs for unsuccessful DrugA through DrugV, and to make a profit, DrugCo wants to charge a price of $500 for a month's supply.

3. The gov't of Sugardaddyland says, "You will sell DrugX in Sugardaddyland for no more than $50."

4. DrugCo says, "Screw you, hippy.  I won't sell you or your thieving *expletive deleted* countrymen one damn dose of DrugX."

5. The gov't of Sugardaddyland says, "Look, I gots the guns.  How's about I get my hands on a sample of DrugX, have my less-competent chemists (who would never have been able to develop it on their own) replicate it, and sell it for $50 in Sugardaddyland.  Hey, maybe we'll even produce so much, we'll sell it all over the world and maybe, with a few bribes, get it into the US market.  How would you like your greatest triumph to be your ticket to bankruptcy?  What are you going to do about it, DrugCo?"

6. DrugCo says, "OK, we will sell it to your population for $50 as long as you do not allow it to be re-imported back into the USA, which is the last place we can recoup R&D & operating costs.  We will charge Americans $1500.  For $1500, Americans get to support the R&D for nearly all the world of ungrateful, good-for-nothing, socialist, slug-fellating turds and their gov'ts"  

7. The gov't of Sugardaddyland says, "Great.  We'll put the guns away.  Whoops, I forgot!  Where does the time go?  I need to write and deliver a condescending speech about how barbaric America is the last industrialized country not to completely socialize its medical sector and control drug costs. Gotta run."