Individual and Employer Health Insurance Plans
Individual and Employer Group Health Insurance Marketplaces – Interactions and Stabilization
With regards to Stabilizing the Individual and Group health plan marketplaces, one must understand that they do not operate independently of each other; and changes in one will destabilize the other, impacting the cost of health plans and people’s opportunity to go to the Doctor, Hospital, etc. that people want to go to for care. If Employers are ‘not subject to a penalty’ when employees access Subsidies on the Exchanges to purchase Individual plans for themselves or their families, the ‘affordability rules’ must be redefined.
Today, most Employers, Government and Non-Government, offer a low-cost high-deductible health plan with the Employee cost for the health plan equal to the Medicaid eligibility income, in order for the Employer to avoid paying a penalty for an Employee buying a health plan with a Subsidy on an Exchange. In turn, this means that Employees and their families are NOT eligible for a Subsidy to buy a health insurance plan on an Exchange. In addition, Employers have also reduced employee’s hours, making employees ineligible for health insurance through the Employer; or stopped offering health insurance altogether; since Employers know people can buy their own health insurance plans.
One item we often forget to discuss is that people pay for health insurance plans at work, their Employer-based health plan; and typically pay $100 to $300 per month for an Individual-Only health plan, more than many people pay on the Exchanges, if they get a Subsidy.
It’s important to note that if our employer-based healthcare system fails, which is ~60% of the health insurance marketplace today; then, our health care system fails!
With regards to Employers offering employees health insurance, it is time to set “new standards” for what should be deemed ‘minimum Employer-offered financial assistance’. Employers could offer employees Defined Contributions, or an Employer HRA program to their employees; however, the programs need to have preset limits on how much an employee can be reimbursed, with the intent being to not destabilize the Individual health insurance marketplace.
In setting a new standard for ‘minimal Employer-offered financial assistance’ for an employee’s purchase of a health plan offered by an Employer, we should make sure that it correlates to either the Subsidy or proposed Tax Credit program. In addition, the tax implications of the health plan premium payments need to be taken into consideration, when determining the Employer contribution to any health plans that are offered to employees and their families.
For example; If an Employer offers Employer-based coverage, the Employer must offer financial assistance that is a minimum flat dollar amount, or a percentage that exceeds that minimum, per month. Basically, a Defined Contribution arrangement, with multiple health plan options. Under a Subsidy Tax Credit program, the Defined Contribution could be the equivalent of 1.5 times the available Subsidy Tax Credit, inclusive of HRA funds, or higher. The financial assistance to the employee and/or family; and the impact on family coverage through an employer also needs to be taken into consideration, so as not to hurt families.
Time for a NEXT Generation CDHP/HSA Plan
Consumer Driven Health Plans and Health Savings Account eligible health plans, CDHPs/HSAs, have been undermined by prescription drug prices that are in the $1,000’s/month, primarily as a result of prescription drugs having to be covered as embedded benefits, within all health plans.
HSAs have been around since 1997, over 20 years, as the Archer MSA program; and people still can’t “shop” for healthcare services, or lack options, mainly in rural areas. The ‘next” generation CDHP/HSA should focus on directing people to access low-cost services and prescription drugs ($0 preventive care/maintenance), exclusive of satisfying the deductible. Therefore, consideration should be given to exempt some Doctor office visits, Clinics and generic prescription drugs (Tier 1 & 2) from the HSA/CDHP Deductible. The exemptions need to be put in place to allow for people with Chronic Health Conditions to be able to afford to manage their Chronic Health Conditions, without spending $1,000’s first as part of a Deductible.