Wednesday, October 3, 2012

Health Insurance Premium Subsidy Plans Coming to Private Employers

It’s Not Just For Medicare

As a way to reduce the Federal government’s bill for providing health care for seniors Republicans are proposing the change the current program to one of private insurance.  The government would give each senior a voucher or premium subsidy and the senior would then go out and shop for insurance on their own.  The selling point is that competition would make care affordable.  This is fantasy.  The goal is to reduce the amount paid for by the Feds and increase the costs borne by the individuals.

So far this change in Medicare has no traction, but in the private sector employers who are suffering from an increasing high cost of employee health care are now starting to implement a similar plan.  Sears and Darden Restaurants (Olive Garden and the like) will go to this type of plan.

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.

This is not exactly like the Medicare proposal, because employees will still be choosing from group plans, unlike senior who will have to obtain individual coverage if the Republican plan takes effect.  But like the Republican plan the companies’ say their goal is not burden shifting but cost reduction.

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.

But this is simply window dressing.  Look at the chart on costs and who pays, employee vs. employer.  Everyone knows that the goal here is the same as the goal of those who would replace Medicare with premium subsidies, reduce the costs of employer and as health care costs go up, shift more of the burden to employees.

Is this the end of employer group health insurance programs that are largely paid for by employer contributions?  Yes, but unless the health care system is reformed so that fee for service systems are eliminated, that was going to happen one way or another.  Sorry workers and seniors, you’re going to be on your own. 

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