Workplace Health Insurance—It’s Not Dead Yet
A lot of people are betting on a future without employer-sponsored health insurance. Entrepreneurs are creating businesses based on this model. Health insurance brokers are courting individuals and enjoying record-breaking business growth. And politicians from all parties are proposing limits to the favorable tax treatment of workplace health insurance. Meanwhile, employers are acting like business as usual in administering their health insurance plans.
They continue to rely on lame tactics like wellness programs and private exchanges to control health insurance costs. When just a few years ago employers were mocking the return on investment (ROI) claims of workplace wellness programs. Today they vainly commit to these programs despite all the evidence their initial skepticism was right. They embrace the private exchanges created by big insurers and big consulting firms. The same groups they’ve been partnering with for decades and whose only talent is to create more ways to shift costs to employees. So in a sense it really is business as usual for employment based health insurance. Without optimism or enthusiasm employers continue to employ the same follow-the-leader strategies they’ve been using since, well, forever.
Regulation and Revolution
But change may be coming, if it’s not already here. Employers are learning that health insurance costs is about more than premiums. It is also about administration. Current and proposed regulation of health insurance plans is making the administration of these plans more complex and, therefore, more expensive. Employers are paying millions in legal and consulting fees, information technology system upgrades, and reporting and compliance outsourcing to meet new regulatory requirements. All while trying to keep their health plans attractive and competitive. Additionally, plans may be subject to other fees and taxes not previously required.
Even employers with dedicated employee benefit departments are seeing their administrative costs rise because few benefit administrators are well versed in all the administrative requirements of these regulations (mostly Obamacare). These departments must also hire outside consultants and lawyers to help them develop and maintain a system of compliance.
And as employers consider the new administrative expenses in this post health care reform environment, they also have to contend with how health care reform gives their employees more options than they ever had before. Whereas once health insurance could be used to attract and retain the best employees, employers may need to rely on other ways to hire and keep talent. And almost anyway you look at it those other ways will cost employers money. Employers who don’t want to offer more will have to accept the consequences of increased turnover and low productivity, and even more costs.
Some people argue that as long as employers are able to save millions in taxes and use health insurance as a substitute for suitable wage increases, they will continue to offer health insurance. Others believe that forces outside of the control of employers are at work pushing health insurance to the no longer worth it column. Who knows if or when employers will stop offering workplace health insurance? But one thing we do know is that regulation and revolution are rapidly adding to the costs of offering workplace health insurance. And when the costs of offering workplace health insurance catches up to the benefits of offering workplace health insurance, workplace health insurance will end as others predict.