Will businesses drop their health benefit programs?

[eridani]

Can we, the non-terminally perky, say "I told you so" yet?

http://money.cnn.com/2010/05/05/news/companies/dropping_benefits.fortune/index.htm

The great mystery surrounding the historic health care bill is how the corporations that provide coverage for most Americans -- coverage they know and prize -- will react to the new law's radically different regime of subsidies, penalties, and taxes. Now, we're getting a remarkable inside look at the options AT&T, Deere, and other big companies are weighing to deal with the new legislation.

Internal documents recently reviewed by Fortune, originally requested by Congress, show what the bill's critics predicted, and what its champions dreaded: many large companies are examining a course that was heretofore unthinkable, dumping the health care coverage they provide to their workers in exchange for paying penalty fees to the government.

That would dismantle the employer-based system that has reigned since World War II. It would also seem to contradict President Obama's statements that Americans who like their current plans could keep them.

<snip>

It's these analyses -- which show it's a lot cheaper to "pay" than to "play" -- that threaten to overthrow the traditional architecture of health care.

http://pnhp.org/blog/2010/05/07/will-businesses-drop-their-health-benefit-programs/

Comment from PNHP: Yesterday's qotd message described measures in the Patient Protection and Affordable Care Act (PPACA) that would motivate employers to downgrade their health benefit programs to an actuarial value of 60 percent (the employees would pay an average of 40 percent of actual health care costs, in addition to their share of the insurance premium). Today's message reveals that major employers are considering the option of dumping their health benefit programs altogether.

The government subsidies for plans purchased in the state exchanges are large enough to shift a major portion of the costs of the health benefit programs from the employers/employees to the taxpayers. Further, the subsidized Silver-tier plans in the exchanges provide an actuarial value of 70 percent, resulting in greater benefits than the downgraded plans would have, at a net lower cost for the employers.

Unfortunately, neither is a great deal for the employees and their families. Employer-sponsored plans currently have a typical actuarial value of 80 percent, and sometimes as high as 90 or 95 percent. PPACA exchange plans will shift more costs to those who need health care by reducing the effective actuarial value to 70 percent for those with incomes over 250% FPL (federal poverty level), and those with incomes over 400% FPL would have no out-of-pocket limits to protect them.

Regardless, the complex structure of PPACA will result in worse coverage for employees than many of them currently have. This was the result of Congress and the Obama administration insisting that reform be built on our existing employer-based system, while facing the complex logistical problems of balancing the flow of money between individuals, employers, the government, the insurers, and the providers of health care.

It would have been far simpler, less expensive, and much more effective to establish a single financing pool, equitably-funded through the tax system, while providing significantly greater value in health care purchasing for all of us through a publicly-owned, publicly-administered, beneficent monopsony - an improved Medicare for all. We can still do it.

[Lasher]

1. Looks like retirees might be protected for awhile

Some Retirees Will Receive Aid to Pay Health Bills

WASHINGTON — The White House announced Tuesday that it would help pay medical bills for early retirees who have health insurance provided by their former employers.

The purpose of the temporary $5 billion program, authorized by the new health care law, is to reverse the erosion of employer-sponsored insurance.

The administration said its goal was to provide “as much relief as possible as soon as possible” to employer-sponsored health plans.

Under the program, the federal government can reimburse employers for 80 percent of the cost of claims from $15,000 to $90,000 a year for a retired worker who is 55 or older and not eligible for Medicare.

The program will run from June 1 of this year to Jan. 1, 2014, when many early retirees, like millions of other Americans, will be able to enroll in health plans offered through new state-based markets known as insurance exchanges.

The government said it would help defray the cost of medical claims paid by employer-sponsored plans for early retirees and their spouses, surviving spouses and dependents.

Under the new law, Ms. Sebelius said, employers must use the federal money to reduce “health benefit costs” for themselves or their retirees — for example, by reducing premiums, deductibles or co-payments.

As a condition receiving federal aid, employers must maintain their current contributions to the cost of retiree health benefits.

In addition, to qualify for federal aid, Ms. Sebelius said, health plans must have “programs and procedures” to save money for people with chronic and high-cost conditions like diabetes and cancer.

In a preamble to the new rules, Ms. Sebelius said the government could deny or stop accepting applications if it appeared that the $5 billion would run out before 2014.

Many companies expected to apply for the new program already receive federal subsidies, under a 2003 law, to help offset the cost of providing prescription drug benefits to retirees, Ms. Sebelius said.

http://www.nytimes.com/2010/05/05/us/politics/05health.html?hpw

[eridani]

19. And if your employer fucks you over by dropping your doctor, then what? n/t

[Lasher]

21. Then I guess you find a different doctor.

Or a different employer. Or a different country.

[eridani]

24. Or get single payer, which doesn't fuck people over by taking away their doctors n/t

[Lasher]

27. That's where I was coming from with the different country thing.

[Scuba]

2. This is why we need a national single-payer system...

As one DU member so aptly puts it "I'd rather have my health care decisions made by a government beaurocrat who doesn't care if I die than by a corporate beaurocrat who's livelihood depends on it"

[ProdigalJunkMail]

3. and in lieu of that...

that horrendous bullshit should have not been passed...the ramifications of that piece of excrement known currently as HCR will be a total clusterfuck when all is said and done...

sP

[area51]

13. +1

Every day, 273 people die due to lack of health care in the U.S.

We need single-payer health care NOW.

For any nazi lurkers reading this, even with "good" insurance, you're only one bad illness away from bankruptcy in our current system.

And your gated communities won't keep out diseases like TB; since morality doesn't move you, you should be concerned about diseases other people are carrying.

[varelse]

16. Good point (nt)

[WinkyDink]

4. Obama always was speaking out of his (fine) arse, re: "can keep". Employees ARE NOT IN CONTROL.

And you can't KEEP something the company ELIMINATES.

[Lasher]

9. It's a mistake to have employers providing health insurance.

The reasons for this are constantly paraded before us. But we refuse to see because Republicans and many Democrats cling foolishly to their failed private sector ideology.

[femrap]

14. And 'you can't be

denied for a previous condition.' But they can charge you an arm and a leg to cover that condition!

[boston bean]

5. Documents reveal AT&T, Verizon, others, thought about dropping employer-sponsored benefits

The great mystery surrounding the historic health care bill is how the corporations that provide coverage for most Americans -- coverage they know and prize -- will react to the new law's radically different regime of subsidies, penalties, and taxes. Now, we're getting a remarkable inside look at the options AT&T, Deere, and other big companies are weighing to deal with the new legislation.

Internal documents recently reviewed by Fortune, originally requested by Congress, show what the bill's critics predicted, and what its champions dreaded: many large companies are examining a course that was heretofore unthinkable, dumping the health care coverage they provide to their workers in exchange for paying penalty fees to the government.

http://money.cnn.com/2010/05/05/news/companies/dropping_benefits.fortune/index.htm


Read the entire article, very enlightening....

[canoeist52]

6. I hope my daughter's company drops health insurance.

Then she could get on the state plan (MassHealth). Petco offers the cheapest insurance from Aetna for it's part-time employees. This "affordable" plan has a $10,000. yearly cap, which doesn't even qualify it to be called catastrophic insurance. But Massachusetts denied her application because her company offered "insurance".

[eridani]

20. And the HCR passed emulates MA in that n/t

[annabanana]

7. The only solution, should this happen, is the

medicare buy-in.

[NNN0LHI]

8. Without a union contract they can do anything they want

Of course workers could just depend on the good nature of their boss to treat them fairly. But I wouldn't count on that.

Don

[Catshrink]

10. It happened to a friend of mine.

The company dropped it's medical plan and told the employees they could buy "Obamacare." Of course there was no adjustment in compensation, the company owners just pocketed the money they would have paid for insurance premiums. Mostly likely it was just a way to reduce their payroll costs and blame it on Obama rather than take the heat themselves.

[Change Happens]

29. They will be subjected to a fine soon enough.....nt

[Catshrink]

32. The company or my friend?

[Change Happens]

34. The company.....A fine in the form of a tax to help cover people, I like the idea

and we can always go back and increase the tax...etc.

[undeterred]

11. More likely that they will offer useless health care benefits.

At my low paying temp job they offered affordable but useless insurance- the kind that pays $50 per ER visit. Decent insurance would be too expensive for the temps to afford. So they can still say they are offering health insurance but you're just as bad off with it as without it.

[Obamanaut]

12. SInce most businesses are in it for some sort of a profit, if the fine

for not offering insurance is a smaller expense than offering insurance, the bottom line would suggest this is the way to go.

Not the most popular.

[CTLawGuy]

30. you have to consider retention also

having good benefits may attract high quality employees, and getting rid of them may cause these employees to go to a competitor who does offer insurance.

[slipslidingaway]

15. knr ...

"...AT&T revealed that it spends $2.4 billion a year on coverage for its almost 300,000 active employees, a number that would fall to $600 million if AT&T stopped providing health care coverage and paid the penalty option instead. AT&T declined comment..."

[NNN0LHI]

18. They aren't spending $2.4 billion a year on coverage for its employees because they are nice

A union contract and collective bargaining is the reason they are spending that money. Communications Workers of America.

The "AT&T declined comment..." part of that article is AT&T blowing smoke up someones ass.

Don

[NC_Nurse]

17. That could be a good thing. Maybe more people will be in the exchanges and

drive prices down. Attaching healthcare to jobs is not a workable model anyway. It's sucked so far.
Companies just go with cheaper and cheaper policies and make employees pick up more and more of the costs anyway.

I hope this moves us in the direction of cleaving the link between employment and health insurance. Even that beats the current situation, although single-payer would be better, IMO.

[BzaDem]

22. The critical point you are missing is that without reform, they can drop coverage with NO penalty.

AT&T, Deere, and other big companies (including companies where employees are not unionized) could all drop coverage RIGHT NOW if they wanted to. They could have done it 10 years ago. Without having paying one dime.

Why haven't they? Because people expect to be provided health insurance as a benefit.

So what does this law change? People will still expect to be provided health insurance as a benefit. So if employers drop health coverage now but not before, then they would have to ensure their employees still ultimately have health coverage (or they would have dropped coverage before the law). So that means they will give the part of the compensation they previously paid for healthcare to employees to use on the exchange.

How exactly is this a bad thing? The exchange provides large subsidies to the poor and middle class that do NOT go to those on employer-provided health insurance. The exchange will be transparent and heavily regulated. The exchange premiums won't shoot up if a single employee at a small business develops a condition (which is what often happens now with small businesses). How is this worse than having the employer redirect the same amount of compensation towards their own policy?

[eridani]

25. So, how do you decide whether you are a Platinum, Gold, Silver or Bronze human being?

Isn't it just WONDERFUL that your access to health care depends only on your financial situation? And what about the Dirt category for older people who will have to pay three times as much?

[BzaDem]

26. You are comparing healthcare reform to your pie-in-the-sky system. Not the previous status quo.

With HCR: The choices are Platinum, Gold, Silver, and Bronze. All of which cover at least 60% of medical costs (with subsidy amount calculated based upon the Silver plans, which have 70% actuarial value).

Without HCR: The choice for many people is nothing, because individual market plans are unaffordable for anyone with the slightest condition. That means a 0% actuarial value.



With HCR: your access to health care depends somewhat on your financial situation, with subsidies greatly limiting the extent to which it does.

Without HCR: your access to health care depends HUGELY on your financial situation, and often SOLELY. People are much more often bankrupted because of health bills.



With HCR: Older people on the exchanges have to pay up to 3 times as much for healthcare.

Without HCR: Older people have to pay MUCH MORE (5-20 times or more) for health insurance. Usually it is much more because they have a pre-existing condition. Older people are often discriminated against in hiring because of insurance costs.

[eridani]

35. A plan that drains your pocketbook before covering any actual care is useless

The choice is still nothing. Premiums for older people without pre-existing conditions are outrageous before and after "reform." It doesn't do shit for me. The whole notion that available care should depend in any way on income is absolute bullshit. Other countries have just ONE plan that, if private insurance exists, MUST be offered at the government dictated price. If the affluent want to buy extra bells and whistles they can do so--there is no bullshit about building in the disgusting value that people have no more worth than their bank statemsnts indicate.

[BzaDem]

37. "The whole notion that available care should depend in any way on income is absolute bullshit."

Of course people should get healthcare regardless of income. So your solution is to go back to a system where available care depends EVEN MORE on income?

Just because you were left on an island somewhere and no one broke to you that single payer is POLITICALLY INFEASIBLE FOR THE FORSEEABLE FUTURE doesn't mean that it is now somehow feasible because you really, really want it to be. According to your logic, we should dump social security because the benefits aren't good enough. What a joke. There is a reason why every single progressive in the House and Senate thinks your position is full of shit.

[eridani]

40. When 82% support a public option, how is that "infeasible"?

Single payer is feasible enough to pass in CA, and it looks like PA as well. In the latter, 40% of the state legislative supporters are REPUBLICANS. Tell me why states at least should not be able to do it.

[Omaha Steve]

23. Most AT&T workers have a contract that guarantees health insurance

It would be management and non union workers that would loose coverage. And nothing in HCR would have changed what AT&T is thinking of doing. Deere is UAW. Same thing.

[jody]

31. Labor contracts eventually expire. Do you think AT&T workers will have health care in the next one?

[Omaha Steve]

39. Yes I do

AT&T has about one strike every 10 years. You think the employees will just lay down and play dead. Again WITHOUT HCR, AT&T could try to drop it without any penalty!

[Change Happens]

28. Good news , let them, it will lead to single payer! We already have the VA, Medicare, Medicaid, and

All the federal employees, all the local and state governments employees...etc. Very few will be left. Taxes already pay for HC for most of these people, let the big companies walk away and drive more people into the system, we can always decide how much it SHOULD cost them to do so!

[rucky]

33. They won't.

Group plans will not be affected by HCR. This is a bluff. The ones that do follow through will find them unable to keep good employees for long.

[depakid]

36. "The ones that do follow through will find them unable to keep good employees for long."

Not if it becomes the general rule....

CFO's tend to think alike.

[SoCalDem]

38. and especially when there are 20 people wanting a job, for every job "offered"

and we all know that younger healthier people will have a distinct edge if they are willing to "opt-out" of company coverage, in exchange for better standing in the job-selection process.. A company would be nuts to choose a 40 yr old guy with a history of heart disease & a family, who WOULD want coverage.

Companies will quietly start ramping up the employee-share and lowering the benefits, so it becomes more and more prohibitive...and at some point they will have "proof" that it's not something their people "want"..and then they will just drop it like a hot potato.

Ironically, it IS the key to ever getting true single-payer coverage (and of course the issuance of a national health care ID card), because until the upper-middles LOSE their company-participation coverage, they will never see the wisdom of national care.

By doing it gradually , companies will not feel the pressure to return the money to the employees.. what money?.. the "insurance in lieu of raises" money that's been stolen from workers for DECADES.