Tag Archives: employer

Health Insurance

Employer-Based Coverage Does Not Equalize Workers’ Access to Health Care

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InsFormSmallOne reason public policy favors employer-based health benefits instead of individually owned health insurance is the former is supposed to equalize access to health care among workers of all income levels. Insurers usually demand 75 percent of workers be covered, which leads to benefit design that attracts almost all workers to be covered.

Employers do this by charging the same premium for all workers but only having workers pay a small share of the premium through payroll deduction. Most is paid by the firm. Last year, the average total premium for a single worker in an employer-based plan was $6,435, but the worker only paid $1,129 directly while the employer paid $5,306.

Although this suppresses workers’ wages, workers cannot go to their employers and demand money instead of the employers’ share of premium. The tax code also encourages this, by exempting employer-based benefits from taxable income.

Does this equal access to care? Not at all, according to new research: Continue reading Employer-Based Coverage Does Not Equalize Workers’ Access to Health Care →

Health Care Costs

Private Sector Health Benefits Grew 17 Percent Faster Than Wages Last Year

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blsReleased yesterday, the Bureau of Labor Statistics quarterly Employment Cost Index showed private sector health benefits increased 2.7 percent in 2016, versus only 2.3 percent for wages.

Overall, private-sector benefits grew only 1.8 percent, indicating non-health benefits would have grown little if at all. State and local government workers’ benefits grew 3.1 percent, 72 percent faster than private-sector benefits! Continue reading Private Sector Health Benefits Grew 17 Percent Faster Than Wages Last Year →

Health Alerts

Massachusetts Governor Hiking Taxes To Rescue Failed Health Reform

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(A version of this Health Alert was published by Forbes.)

Governor Charlie Baker of Massachusetts has proposed a tax of $2,000 per worker on businesses which do not offer health coverage to employees who become dependent on Medicaid. This makes him the second Republican governor of Massachusetts to buy into the notion that imposing taxes (or fines or penalties or fees) on individuals and businesses can force them to accept responsibility for government failure at getting health spending under control.

image017bEvidence from Massachusetts and the nation shows the opposite is true. Yesterday, I testified on the effect of Obamacare’s individual mandate before the Oversight Subcommittee of the U.S. House of Representatives’ Ways and Means Committee. (The video is at this link, and my written testimony is at this link.)

I was joined on the panel of witnesses by Dr. John E. McDonough of Harvard University’s T.H. Chan School of Public Health. Professor McDonough was a central figure in Governor Mitt Romney’s 2006 Massachusetts health reform, where the individual mandate was first implemented. Governor Romney tried to label it a “conservative” or “Republican” idea. The spin was that the mandate characterized individual responsibility.

The reality is the mandate merely camouflages significant growth of government spending and control over health insurance. This has been the case in Massachusetts since day one: Spending has grown out of control despite many failed efforts to bend the cost curve. Continue reading Massachusetts Governor Hiking Taxes To Rescue Failed Health Reform →

Health Alerts

Obamacare Repeal Has Begun For Small Firms

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Businessman Sitting at His Desk(A version of this Health Alert was published by Forbes.)

My previous Health Alert suggested the 21st Century Cures Act, which President Obama signed on December 13 demonstrated Republicans can lead on health reform. Promoted as a pro-innovation bill, the new law will improve the Food and Drug Administration’s regulatory processes; as well as fund Vice-President Biden’s Cancer Moonshot, the National Institutes of Health, and steps to reduce the opioid epidemic.

However, the final version of the bill also included an important payment reform, which takes a small but significant bite out of Obamacare. Tacked onto the end of the bill, section 18001of the 21st Century Cures Act expands the use of Health Reimbursement Arrangements (HRAs) by small businesses. This is a win for small businesses which were harmed by Obamacare. Indeed, given the overwhelming bipartisan support for the 21st Century Cures Act, section 18001 could be defined as Democrat politicians’ first real step towards conceding Obamacare needs to be repealed and replaced. Continue reading Obamacare Repeal Has Begun For Small Firms →

Health Care Costs

Obamacare’s Effect on Employers’ Health Costs

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The Bureau of Labor Statistics has published a chart showing how health benefit costs among private employers have increased over the past decade. The chart shows health benefits increased from 6.9 percent of total compensation in September 2006 to 7.6 percent last September. The 0.7 percentage point absolute increase is a relative increase of ten percent.

chart1 Continue reading Obamacare’s Effect on Employers’ Health Costs →

Health Insurance

Weakening Business Case For Health Insurance

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BoeingBoeing, the giant aerospace concern which is celebrating its centennial this year, has been cutting out the middle-man for health benefits:

In another sign of growing frustration with rising health costs, aerospace giant Boeing Co. has agreed to contract directly for employee benefits with a major health system in Southern California, bypassing the conventional insurance model.

The move, announced Tuesday, marks the expansion of Boeing’s direct-contracting approach, which it has already implemented in recent years in Seattle, St. Louis and Charleston, S.C.

In other examples, Intel Corp. contracted directly with a major health system in New Mexico, where it has several thousand employees.

Retailers Wal-Mart and Lowe’s took a different approach, striking deals with select hospitals across the country for bundled prices on specific surgeries. The companies steer workers to those hospitals.

(Chad Terhune, “Boeing Contracts Directly With California Health System for Employee Benefits,” Kaiser Health News, June 21, 2016)

I recently discussed evidence that insurers inflate rather than decrease prices for medical goods and services. Continue reading Weakening Business Case For Health Insurance →

Health Insurance

Workers Increasingly Prefer Pay to “Benefits”

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Businessman Sitting at His DeskThe Employee Benefits Research Institute (EBRI), a research organization with a mission “to contribute to, to encourage, and to enhance the development of sound employee benefit programs and sound public policy through objective research and education” includes members as diverse as AARP, Aetna, Boeing, Charles Schwab, and Wal-Mart. In the benefits world, it sits firmly inside the establishment.

That is why EBRI’s latest research on how employees view their benefits should give some encouragement to reformers who want to change the tax treatment of health insurance, and weaken the iron triangle of big business, big labor, and big government which enforces the discrimination against individually owned insurance. From EBRI’s latest Note: Continue reading Workers Increasingly Prefer Pay to “Benefits” →

New Health Care Law

Congress Set To Deficit Fund Obamacare Almost $40 Billion

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iStock_000007047153XSmallI had always feared that Congress’ alternative to Obamacare was deficit funded Obamacare, and it looks like that is coming to pass. This is being done through the so-called “taxibus”, a legislative package that combines popular “tax extenders” (items like research and development tax credits that are legally temporary but practically permanent) with funding the federal government through September 2016.

The bill proposes a couple of years delay in three Obamacare taxes: The medical-device excise tax, he health insurance fee, and the excise tax on high-cost employer benefit plans. All three taxes are bad. However, the bill just delays them without cutting any Obamacare spending. Continue reading Congress Set To Deficit Fund Obamacare Almost $40 Billion →

Health Care Costs

Understanding Why Employer Benefit Costs Are Rising Slowly

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Aon Hewitt, a leading actuarial consulting firm, has reported extremely good news about the cost of employee benefits:

2015 Records Lowest U.S. Health Care Cost Increases in Nearly 20 years

– Rate of increase was 3.2%

– Average health care cost per employee topped $11,000

– Employees’ share of health care costs have increased more than 134% since 2005

After plan design changes and vendor negotiations, a recent analysis by Aon (NYSE: AON) shows the average health care rate increase for mid-size and large companies was 3.2 percent in 2015, marking the lowest rate increase since Aon began tracking the data in 1996. Aon projects average premium increases will jump to 4.1 percent in 2016.

Aon Hewitt’s 3.2 percent rate of growth includes only premium. When employees’ out-of-pocket costs are included, the reason for the slow growth becomes apparent. Continue reading Understanding Why Employer Benefit Costs Are Rising Slowly →

Health Care Costs

Employee Benefit Costs on a “Winning Streak”?

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Mercer, a leading firm of consulting actuaries, tells us that the cost of employee benefits in 2016 will grow slowly – a “winning streak”:

Early responses from a major Mercer survey still in the field show employers predicting that health benefit cost per employee will rise by 4.2% on average in 2016 (see Fig. 1) after they make planned changes such as raising deductibles or switching carriers.

Mercer2

A closer look indicates no real reduction in the rate of cost growth of employee benefits. Continue reading Employee Benefit Costs on a “Winning Streak”? →