Workplace Health Insurance Is An Exclusive Club That Has Outlived Its Usefulness

The Obamacare marketplace has a big problem—too many sick people and not enough healthy people. The problem is so bad that health insurance companies claim they lost billions of dollars and some are leaving the exchanges. Unless the federal marketplace can enroll more young and healthy people these insurers may never return. Another proposition outlined in a New York Times article by Margaret Sanger-Katz, is for the remaining states to expand Medicaid, which will bring down health insurance premiums for everyone.

In her article, Sanger-Katz refers to a study by the Dept. of Health and Human Services that concluded that marketplace premiums were lower (in the high single digits) in states that expanded Medicaid compared to those that did not. That is great news but it’s not enough to offset premium rate increases in the high double digits. For that we need exactly what the health insurance companies claim they want—a healthier risk pool. Moving employer-sponsored health insurance to the exchanges give us a healthier risk pool that will lower premiums, but there is strong opposition to this.

Employers want to hold onto their health insurance programs because they want to control how much they contribute to them. Health insurers want to maintain these plans because they can better predict their risk and set their rates to ensure they always make a profit. Employees want to keep their employer-sponsored coverage because they don’t want to assume the responsibility of choosing and paying for their own coverage. They also want to keep their employer and government subsidies.

Anyone who thinks that these strong powerful advocates for employer group health insurance are going to suddenly decide it is in the public interest to have one health insurance risk pool is mistaken.
Individuals covered by employer health plans make up about half of the insured population. They are over 150 million individuals strong and it will take the other 150 million plus individuals to force change in our health insurance and health care system. And the first thing we other 150 million plus have to do is stop acting like workplace health insurance is more virtuous than other types of health insurance. Continue Reading...


Betterment-Uber Partnership—Bromance Or Gig Economy Revolution

Last week Betterment and Uber announced a partnership to offer Betterment individual retirement accounts (IRAs) to Uber drivers. The program is already available to drivers in four cities—Boston, Chicago, New Jersey and Seattle—via the Uber app.

Who Are These Guys?

Betterment is a robo-advisor. The technical definition of a robo-advisor (robo-adviser) according to is: “an online wealth management service that provides automated, algorithm-based portfolio management advice without the use of human financial planners.”

Basically, Betterment has an online platform and app that allows you to save for retirement or other goals by investing in exchange traded funds (ETFs). To get started you answer a few questions that Betterment’s computer system (aka, automated algorithm) analyzes and then chooses your investment options. You don’t have to, nor could you if you wanted to, choose your own investment funds. Its purpose is to automate the investment choosing and saving process for people who don’t want to or feel they cannot make these decisions alone.

And Uber (originally UberCab) is an app-based ride hailing service whose drivers are independent contractors. The app hit the market in 2010.

A Match Made In Tech Heaven

I’m not surprised by this new partnership—Betterment and Uber have a lot in common. They are both successful tech start-ups that went up against well-established industries—financial advisors and taxicabs, respectively. They both rely on technology to deliver their products in a way their traditional competitors never did. They both emerged during the Great Recession of 2008 but hit the ground running in 2010-2011. They enjoy a lot of media attention and support from venture capitalists. And, increasingly, they market their products to businesses as an employee benefit.

Betterment founded Betterment for Business to offer 401(k) plans to small businesses. Uber has several partnerships with businesses:

Uber for Business – Businesses can set up an account to provide rides for their employees

UberCENTRAL – Businesses can set up an account to pay for rides for their customers

UberPOOL – New York City employees enrolled in a WageWorks commuter flex program can use their commuter benefits account to pay for rides with pre-tax dollars Continue Reading...