As one of many corporate benefits, my company provides 100% covered (FREE) health insurance to its employees. That insurance includes a prescription plan and a vision plan. I’m told it’s a very good plan even comparable to some of the best plans at big companies. This is provided not because the government told us we had to, but because a) we believe it is the right thing to do and; b) it is part of a complete package (and work environment/experience) that helps us attract and retain quality people.
I read something that the Republican party put out the other day with some statistics about North Carolina business environment and costs (we are based in NC). One of the things this announcement stated was a “5.2% Health Insurance Premium Hike” for NC businesses. I’m skeptical about most things coming from either party, but I read that and it didn’t sit quite right. Not that I felt it to was too high but it seemed too low.
So, I did a little research and looked at some numbers. Specifically for MY BUSINESS – this obviously varies by business – the average monthly health care premium that we pay per employee has increased 77% from 2008 to 2012. Yes, seriously, 77%. That isn’t a spin – it’s a numerical fact. And it’s a pretty big deal for small businesses who had already accepted to cover employee health care costs, which are frequently one of the largest expenses for small businesses.
I have personally spoken with our insurance company over these past few years about the increases and they have great
excuses reasons for the additional costs. The reasons are that they are starting to implement items from the ACA (Affordable Care Act). That’s great, I guess, if you are helped by these specific ACA items – and I know some people are.
But what about the “affordable” part of the ACA? In theory it should make insurance more affordable for individuals (unless you are healthy and forced into insurance you wouldn’t have bought previously, so in that case your cost increases 100%) but is it the intent (or fair or reasonable) to shift such a HUGE increase of cost over to employers? It isn’t like employers get this extreme discount and we’re gaming the system so should pay more. That isn’t the case. If you believe that – stop because it isn’t true. I can tell you that from a purely financial perspective many businesses would be better off dropping insurance for their employees and just paying the ACA penalties. The fines run $2,000-$3,000 per employee depending on some specifics and I can tell you that even at the $3k/employee fine rate, my company would save a LOT of money.
Insurance is very expensive and it’s getting worse. Would I advocate dropping insurance for our employees? No way! (See paragraph one.) Do I think there are some issues with health care costs and availability for people – especially people with pre-existing conditions? Yes! Do I believe that the ACA has moved us closer to a good affordable solution and that the additional measures to be implemented will move us closer still? No. Not based on what I’ve seen so far.
What would I propose? It’s a bigger topic than I can tackle and I consider myself ignorant on most of the related facts. That said, it seems like a good first step when the issue first came up years ago might have been to “open borders” so that insurance companies could be more competitive. As a business we are limited who we can get insurance from based on location (state specific). Removing some of those restrictions might open competitiveness, giving businesses (and individuals) more options and better price shopping.
It also seems that being more flexible with “groups” would help. If I wanted to start a group of “The Kingsley Family” that anyone in my extended family could join, it seems that we should be able to offer insurance under that group and get averaged-out group rates. Why would an insurance agency care? They’d get large numbers of covered people, which helps spread the costs, lowering the averages. Why so many restrictions on the types of groups and how hare they are to set up?
I’m sure there are issues with those ideas. Certainly people more “in the know” about insurance than myself have already pondered those ideas, but still, looking at facts and data, it appears that the currently implemented changes have had some substantial negative impacts on at least certain groups in certain areas.