Two years ago I was betting that workplace health insurance was on its way out. I predicted that by the end of the decade at least one large employer would decide to get out of the health insurance sponsoring business (I was thinking IBM since they are not afraid of eliminating benefits). And, because employers generally play follow-the-leader employee benefit management games, I assumed the dominoes would fall.

Two years later, I see employers holding on for dear life to their employee benefit programs out of what I suspect is both fear and self-interest, and maybe some concern for the welfare of their employees. They know that employees prefer to have their benefit plans spoon-fed, and the tax savings don’t hurt either. But what I don’t understand is why employers are not trying to extract any positives from this historic health care reform moment.

Health care technology entrepreneurs are creating businesses to take advantage of the bounty that is health care reform. Health insurance brokers are courting individuals and enjoying record-breaking business growth. Big Pharma and hospitals are enjoying record profits. Insurance companies are creating wealth for their investors. And medical doctors are enjoying their status as the highest paid profession in America.

And employers…? Well, they are acting like business as usual in administering their health insurance plans.

They continue to rely on 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 with minimum to no success. So in a sense it really is business as usual for employment based health insurance.

Regulation and Revolution

If change is coming to workplace health insurance, it needs to come now or employers need to consider exiting the game. What is the point of paying millions in legal and consulting fees, information technology system upgrades, and reporting and compliance outsourcing, just to meet new regulatory requirements?

In the spirit of health care reform, employers should work harder to extract savings from insurers and providers. Because of health care reform business is booming for insurers, hospitals, doctors and drug companies. Employers should demand a percentage in savings of this bounty in their negotiations. Employers are not victims of health care reform and they should stop acting like they are.

Conclusion

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.