As 2015 comes to an end, I'm examining my expenditures for the year. I plan to spend a full day going through my accounts to see where I overspent on non-essentials so that I don't make the same mistakes next year. But I already know how much I spent on health insurance and I know that I'll spend slightly more on it in 2016. I've used all of the health plan price comparison tools and I know I can't get a lower monthly premium than the plan I selected. And that annoys me because I haven't needed medical care services since I was a child.
I pay about $3,500 in annual health insurance premiums and that's considered relatively inexpensive. It is inexpensive compared to the $9,600 in annual premiums an acquaintance of mine pays. Before the Affordable Care Act (aka Obamacare) she was paying twice that as a freelancer. Still $3,500 is a lot of money to pay for nothing. And if I needed to use my plan, I'd have to meet a $6,000 deductible. But I'm okay with paying that deductible if I actually received medical care (aside from the unsubstantiated markup prices for that care).
What I'm struggling with in this American health insurance market is that I have no real options to cut my health care expenses. I can't negotiate my insurance rate with the insurance company. I'm just stuck paying what they demand I pay. I can't design a health plan that suits my lifestyle. I'm stuck with plans designed for sick people.
My ideal health plan would be a $0 premium, high deductible health plan (HDHP) with a health savings account (HSA). This is how it would work: Continue Reading...
The retirement services industry knows its business. It designs, markets and administers retirement savings plans for a fee. In designing and marketing these plans the industry ignores the economic, social and cultural issues that make them inappropriate for low wage workers. This is especially true of 401(k) style plans because they require consistent and increasing contributions that are subject to loss.
Asking low wage workers to risk losing money to save for retirement is not only stupid, it's cruel.
And it's not just low wages that make 401(k) plans inappropriate for poor workers, many of these workers encounter social and cultural issues that make voluntary saving difficult. They often have to provide financial help to family members, while meeting their own day-to-day needs. As author Mel Jones points out in her excellent article in washingtonmonthly.com, The Second Racial Wealth Gap, this is especially true for black and Hispanic workers.
A 401(k) Plan Alternative For Low Wage Workers
The new state and federal based Individual Retirement Account (IRA) programs are an option for workers whose primary obstacles to saving are accessibility, ease of use and risk aversion. However, these plans don't address the issues of not having enough to save and dealing with family financial obligations. These workers need a government program that deducts money from their paychecks and diverts it to a guaranteed retirement income plan. A plan that also offers advantageous tax benefits that wealthier workers enjoy from participating in 401(k) style plans.
The great thing about coming up with alternatives to the 401(k) plan is that we already have models in the form of Social Security (SS) and the Retirement Savings Contribution Credit (SAVER's) credit. So instead of state run IRAs, we could have state run defined contribution plans modeled after Social Security, not traditional pensions. We can call them, State Retirement Plans For Low Wage Workers or SERPLOWs.
Funding SERPLOWs: Continue Reading...
This is the time of year when human resource (HR) experts discuss the top trends in employee benefits. These annual observations typically focus on health plan design or delivery systems that are gaining momentum or at least not losing it. Think high deductible health plans and private exchanges. Or they concentrate on survey responses from employers about programs they are sticking with despite their lack of effectiveness. Think wellness, employee engagement and communication programs. But there is one on-going benefits trend that never makes an HR top trends list.
Maintaining the financial status quo of health insurers and benefit plan service providers.
There is a raging war going on in both the health care and retirement plan industries that service workplace benefit plans.
- Health insurers are in a fight with health care providers, hospitals and pharmaceutical companies over costs that are threatening their profits. Health insurers are showing that they are not afraid to take on other parts of the health care delivery system. They are looking to Congress to reign in pharmaceutical costs, as well as pitting big pharma against itself when negotiating discounts. Additionally, they are cutting providers from the networks who won’t offer better discounts.
- Pharmaceutical companies are in a political and public relations battle over the ever-increasing prices of both specialty and generic drugs. They are also battling with health insurance companies that they blame for providing inadequate prescription drug coverage under their health plans. And, big pharma continues to play the research and development and innovation costs cards to justify its high prices (all while providing no cost information…).
- Health care providers and hospitals are sparring with health insurers over proposed mergers, narrowing of provider networks and low claims reimbursements. There's not much new to see in this fight except to see if the health insurer mergers will lead to greater health care discounts from providers.
The war over workplace retirement plans is not as high profile as what’s going on in health care, but it is important to track nonetheless. In fact, the fight to hold onto the retirement plan service provider status quo is even more epic because it pits the industry against the government over several issues. Continue Reading...
Organized labor deserves a lot of credit for its early efforts at getting health insurance and retirement benefits for workers. But labor also has a history of being slow to adapt to economic, social and political changes that challenge its mission. This has led to a slow erosion of labor union membership in the private sector. It has also resulted in attacks on the health and retirement benefits labor fought so hard for.
I applaud labor's support for the Affordable Care Act (aka Obamacare), and its wider support for universal health care. However, ironically, some of labor's biggest concerns these days involve provisions of Obamacare it sees as unfavorable to its members--the perceived threat to multiemployer health care plans and the "Cadillac tax" (an excise tax on high value health plans). Granted, these provisions are not favorable to unions as they currently operate. But that's the public policy point. Union friendly policy makers are less concerned with the role of unions and more concerned about health and retirement plan access and affordability for everyone. I'm concerned that labor's historical reality of focusing on its narrow interests and its members may cause it to miss out on an opportunity to help achieve the universal health and retirement benefits it claims it wants.
There are several health insurance and retirement plan issues unions can support, and that are growing in economic, social and political importance.
Health care price transparency. Doctors, hospitals and insurance companies have given little substantive attention to the need for providing prices for medical care to consumers. Even as consumers are forced to assume a greater share of the cost of care by way of large deductibles, the medical care establishment consistently pushes back on real price transparency.
- Labor unions should advocate for a change to the Employee Retirement Income Security Act (ERISA) to mandate real medical price transparency by insurers and health care providers. ERISA is a federal law that sets standards for private health and retirement plans. Currently, many insurers provide limited tools that give questionable estimates of cost for some care. Providers offer even less assistance and routinely prescribe care without any consideration of its price and if a cheaper alternative is available.
It's not enough that health insurance cost so much, insurers have to remind us of this during the Christmas holiday season. It's like they are fiendishly saying, "add this to your holiday shopping list." Secret Santa Gift - $150. Gift for mom - $250. Gift for significant other - $500. Gift for my health (insurance) - $9,500!
I say, if health insurance open enrollment has to occur this time of the year, health plans should be on sale. And, no, not sale as in we are now selling high-priced health plans, but sale as in, discounts for everyone. Not just discounts for the poor (although I'm totally for that) and the employer-sponsored, but health insurance discounts for everyone. And if someone says, there are health insurance discount sales available if you shop wisely and focus on overall costs and not just premiums, I'm putting them on a separate list.
The idea that people who are not eligible for government subsidies to pay for health insurance can afford it if they only shopped wisely, is false. It’s a total cop out by reformers. And where did this idea come from anyway? Just because someone in Washington, no matter how brilliant they may be, decided that the cutoff for individual subsidies was a certain amount does not mean that everyone else can comfortably afford health insurance. They can't. Continue Reading...