Each year executives across the country are faced with tough decisions regarding the provision of health care insurance to their employees. Questions like what type of coverage to provide, how much employees should contribute towards this insurance, and which employees are covered, are coming under much more scrutiny than in the past.
The idea of employers owning the burden of providing health care insurance in the United States originated less than two generations ago during WWII. Then employers found offering health insurance to be a way to get around the wage freezes, as an enticement to attract scarce workers. In 1945, when President Truman failed to get his sweeping national healthcare programs passed, corporations offering health care insurance steadily became a standard part of the employment relationship that has continued through today.
Health insurance programs, usually offered to full time employees, have taken much of the risk of health care coverage from American employees. However this risk has been replaced by a sort of malaise when it comes to employees making intelligent health care consumption choices. Since many insurance programs don't discriminate among the various choices for the provision of health care services (for example choosing to visit your hospital emergency room for a bad cold), employees often don't act like smart consumers when it comes to health care choices. Employees who fail to consider the most effective venues and treatments for their illnesses contribute to increasing costs of healthcare and significant inefficiencies in our system.
But as we all are becoming aware, our healthcare system in the US is changing, as are the ways in which we insure against these ever rising costs. During the Obama administration our federal government has made the furthest inroads yet on prescribing who and how Americans procure health insurance. A prolonged recession is putting extraordinary pressure on US corporate profits, causing executives to rethink this grand bargain. Technology is expanding the choices available to treat illness and extend life expectancy.
Does the relationship between what has become the benevolent corporation expected to offset the health insurance costs of the individual still make sense in the 21st century?
I personally believe it is time to rethink this bargain. We must use market demand, consumer choice, and free market pressures to balance and align health care as we do in so many other consumer markets. As employers we owe it to our employees not just to help subsidize the extraordinary cost of consuming health care through the offering of health care insurance, but also to help them make good choices.
One way we ought to consider changing the status quo is by offering subsidized health savings accounts coupled with high deductible insurance programs in lieu of many existing health insurance programs. High deductible plans mean that for the first several thousand dollars of an employee's annual health care spend, they actually pay this out of their pocket. I expect that involving the employee in actually paying real money for their health care consumption might encourage them to ask more questions, be more selective in their services, and think about costs rather than just plunking down their employer backed insurance cards. Subsidizing health savings accounts will help to take the sting out of the high deductibles paid by the employee - but still require the employee to physically pay the bills.
The cost to employers for offering these types of plans should end up being a wash. High deductible health insurance should cost less than other plans. That savings could be used to fund the subsidies for the HSAs. Healthy employees can keep the money in their HSA and roll it over year to year, gaining value and maintaining that as a rainy day fund should their employment relationship change or something catastrophic occur.
As employers we need to start thinking about these kind of alternatives as our small way of participating in finding a solution to escalating medical care costs.