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Corporations Moving More of Healthcare Costs to Employees
By EconMatters
Rising Healthcare Costs for Employees
It used to be one of the major advantages of having a good job with a fortune 500 company as they basically paid for the healthcare costs of employees. However, the trend each year is to shift more and more of these rising healthcare costs to employees as subtly as possible. Employees really need to read the fine print of their company`s healthcare plans, and have money set aside for the real costs of these company supported plans.
The Good Old Days
When my mom worked for a fortune 500 company, there were no yearly deductibles or out of pocket expense deductibles; there was just a $5 copay for each doctor`s visit. Oh the glory days of great company healthcare plans. The next incremental step in this process of making employees subsidize more of these rising costs for companies was to raise the copay from $5 to $10 to $15 and so on depending upon your company and Insurance provider.
Incrementalism at its finest
The next brilliant idea borrowed from the Auto Insurance Industry was to create an annual deductible like $500 so as to offset some of these rising costs and shift more of the burden to employees. It is pretty easy to hit that $500 mark on an annual basis, and multiply this number by a large employee base and this is quite a profitable savings for companies.
But in what I call the ‘Consultantism’ of corporate America where it seems consultants have a larger influence on many strategic decisions and dream up creative ways to add ‘value’ to the bottom line of companies for a large fee of course the incrementalism of shifting healthcare costs didn`t stop there with the annual $500 deductible.
The next brilliant idea was to create another type of deductible in the ‘Out of Pocket Expenses’ Deductible. And the shiftiness of this move alone just screams “How can we market this increase to employees so they don`t bring out the pitchforks?” I realize there are some slight differences, but seriously, companies for all intents and purposes could just have raised the annual deductible.
Healthcare is affordable as long as you don`t “Get Sick”
If an employee starts racking up any type of healthcare costs, and with out of control healthcare costs, almost any healthcare event or significant illness is going to end up in the employee hitting this out of pocket expense deductible rather quickly. So much so that every employee should just set aside this amount each year for this healthcare expense. Accordingly if you have a car accident, the Flu where an employee has to visit the emergency room, breaking of a leg playing softball, major food poisoning, appendicitis, etc. on up the risk scale to Heart trouble and Cancer you are going to become rather familiar with this Out of Pocket Expenses Deductible classification.
The Slippery Slope turned into an Avalanche
The shifting didn`t stop there though as what initially started out as $1,000 out of pocket expense caps or deductibles, have been rising each and every year as corporations and health care providers (by Health Care providers I am referring to Insurance companies here) and hospitals/medical facilities all look to shift costs to employees. It really is a concerted effort with much cooperation by these three parties, they basically have become incentivized to collaborate behind the scenes, as their interests are incentivized and aligned all in opposition to the employees of said companies. All with the common goal of “How can we shift more of these costs to employees” instead of looking at creative ways of addressing why these costs have risen so much above almost every other market category from an inflation standpoint in any consumer index.
What do you think HR`s Savings Initiative Ideas were lately?
Therefore, the $1,000 out of pocket expenses deductible was raised to $1,500, then $2,000. And I could just see the meetings between the healthcare providers and the companies in regard to making these cost increases palatable for large companies. “Ya know if you just raise that out of pocket expenses deductible another $500 per employee, look how much additional revenue you will have this year, or save on this expense….so it doesn`t even become that big of an increase for your company!” Or you can just see some ‘brilliant employee’ with a savings initiative for the Fortune 500 firm proposing this company-wide tax for employees of which he will also be affected to raise the out of pocket expenses cap again this year! Consequently this out of pocket expenses cap has gone up from $1,000 to $1,500 to $2,000 to $2,500 to $3,000 to $3,500 to $4,000 depending upon your company. Right now the two deductibles are inclusive of each other, so if you hit the initial $500 deductible this is inclusive of the Out of Pocket Expenses Deductible of let`s say $3,500. However, expect this to change over time as the incremental move which appears to be heading towards outright privatization of employee health care continues along this trending path!
The Devil is in the Details regarding Healthcare Costs
Therefore, drill down into your healthcare plan and read the fine print as I guarantee you the headline numbers don`t “emphasize” or market this Out of Pocket Expense Deductible as this is what every employee needs to focus in on regarding your true healthcare cost exposure each year. The company and HR are not going to Advertise or sell the plan of a $3,500 Out of Pocket Expense Deductible to employees as such a great benefit that they are providing for them. Especially when this same deductible was $1,500 three years ago depending upon your company. Too bad Fortune 500 firms cannot raise salaries along the same lines on a percentage annual basis the way they do Out of Pocket Expense Deductibles in healthcare benefits plans!
Healthcare Industry requires complete Overhaul
The companies are not really the real issue, it is obvious that the Healthcare Industry in the US is in need of some major overhaul, and I am not talking about a politically expedient solution as was the latest undertaking by the Obama administration. The entire healthcare system needs to be completely overhauled similarly to other Industries like the Defense Industry and Education Industries.
Political Industry Broken
These three Industries have metastasized for the last 30 years into giant economic cancers where costs, inefficiencies and bureaucracy have ballooned far outside of any normal market forces not artificially supported through poor governmental policies. The fourth Industry is probably the Political Industry that requires an overhaul because the incompetent Political Industry is part and parcel what has enabled these three Industries to become so inefficient, artificial, costly and unproductive economic black holes from a resources standpoint.
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JMHO, there are two main problems with healthcare (and a third problem which is a derivative of the first two):
1. financialization of healthcare has led to hugely higher costs. Insurance companies are hedge funds using the float of the premiums and they pay their executives ridiculous amounts of money to be simple parasites. Insurance companias, as with banks, have the largest and most expensive building in every city. It is now a government mandated extortion racket, extorting consumer, providers and government.
2. It is not run by economic common sense. It would cost me a lot more to pay my doctor in cash at the time of service than it costs my insurance company, with all of their overhead, to pay the doctor 6 months later. The price model is wrong, by insider agreement (there is no bulk purchase of services, only bulk payment at a later date). The same holds for pharmaceutical prices. It would make sense that the lowest price should be paid in cash at the time of purchase. It is not. The lowest price is paid by the insurance company through negotiated agreement. But insurance companies do not buy in bulk. They just pay in bulk.
There is a third issue that relates to the above two. Because of the parasitic financial drag of insurance, legal and regulation on medical providers, they are forced to grow their business to the point where they can absorb the added costs and dilute them across a larger number of patients and services. This not only causes them to borrow more money for fixed assets and working capital (increasing financial costs), but also gets them trapped into prescribing drugs and activity (such as medical tests) which are not needed or desired by the patient. Grow or die. There is no room for the 1 man private practice in the financialized and monopolized health world. It is sick.
Obamacare gives you more than one option.
Option 1: Go broke
Option 2: Die
Quit complaining.
This is how the free market works. If you can’t muster the productivity for a pill, you die. Reaganomics front and center, if you will.
What next, subsidized Uber rides because some people are too lazy to take an Auntie for a Dr. appointment? She’s yours.
In Australia we pay a 2% levee on income and get essentially unlimited free health care (some not generally unreasonable waiting periods may apply).
Perhaps a change of citizenship may be wise (as if you don't already have plenty of reasons to leave that fucking shit hole failed state the USSA).
Australia! Australia! You bloody beauty!
(And don't give me that, "they took your guns" bullshit. More guns than before the buy back now).
My unreserved compassion for the particular fuckedness of your government.
I'm glad I still had a choice to get a Health Savings Account, though it does have a high deductible.
Not only that but the "healthcare" today basically SUCKS in equal or greater proportion to the Employee cost burden! Doctors either can't speak English or they are lying sadists and they aren't really even medical school graduates.
Those insured by Cigna have a new pharmacy benefit manager, it's named United Healthcare.
Indeed it's getting very interesting in healthcare with insurers. Here's a post I made today and you can't make this up...those insured by Cigna now have a new pharmacy benefit manager to go with their plan, it's name? United Healthcare who now along with being the largest insurer in the US is now the largest PBM in the country after the 10 billion dollar bond sale to buy Catamaran PBM to combine with their already owned and in house PBM OptumRX. Looks like those folks insured by Cigna are stuck too, as before the acquisition of Catamaran by United, Cigna had just signed a 10 year contract with them.
So here you go, sign up for one plan and part of your premiums can not only help one insurer buyback program, but now a two fer...both benefit from the dollars paid by consumers and/or the government in the case of contracts.
You can read also how Cigna has pulled out of the Obama care market in Florida a couple weeks ago and see why. Express Scripts was also squeezed by the too big to fail insurer.
http://ducknetweb.blogspot.com/2015/10/if-you-are-insured-by-cigna-guess-what.html
Also speaking of United their CEO has now take a board seat with Cargill, who's the evil twin company of Monsanto.
Health CARE versus Health INSURANCE.
The costs of CARE are linked to technology, tort liability, and the usual shareholder returns yada yada yada...These costs are reformable. We can decide tomorrow to reform tort liability and tell the ambulance chasers to go fuck themselves. Same with the lottery ticket mentality entitlement asshats. Ain't gonna happen, though.
The costs of INSURANCE are a product of regulation, legistation, and legal directives. This is also reformable. We got the democrat style reform laid out before us. We have single payer staring us down from not too far out in the distance. The old system is NEVER FUCKING COMING BACK. NEVER. EVER.
The shit has been hitting the fan for some time now. Everyone thinks it can be reversed, made better, whatevs...not gonna happen. Next time you are behind that EBT shithead in the grocery store, just say be a heartless bastard and say "Hey! You're Welcome!" and don't break eye contact to establish dominance. It's about the current extent of non actionable civil disobedience you can undertake. And fuck 'em, I could care less what they say back.
We all knew a lower quality of life was coming. It is just playing out in different ways.
US Healthcare is a fascist construct: A highly regulated, government-controlled market. Cronies and Insiders are allowed to play in the government-supported oligopoly, but in turn, they must fully support the policy and political aims of the state.
The insurance companies have the same or worse (remember AIG in 2008?) notional derivative exposure as the banks.
what that means, for someone who thinks they have a "health insurance policy" is that what they are REALLY paying into is an "insurance insurance policy" -which is what the monthly premium has become.
BTW -that monthly premium payment was declared a "tax" by Chief Justice Roberts-which relieves the companies from being required to provide any benefits in return for that premium.
No legislature or court in the world will ever define what exactly must be provided for in return for a tax payment.
The real kick in the nuts comes when the government announces that healthcare costs are going down because they're only counting the cost to it or your employers. They don't factor in your increased costs for co-pays, deductibles, and out of pocket expenses.
3500 can someone pass what he's smoking please... try 13500 with a 9000 deductable, and you can only save 6500 in your HSA to offset that...hmmmm....mafs aint they strong point is they.
Many physicians are eye balling this process. The question we are asking ourselves is: can I survive. If one is in a solo practice the answer is quickly becoming an easy 'no'. It is the decreased reimbursements, the increasing burden of getting authorization for tests that you do not get paid for and the increasing deductibles that revent patients from buying the services you do get paid for. Larger groups have some advantages but the individual docs lose control over personel and their own time.
I see many docs who are nearing retirement who will retire early or quit soon as they are over the age they can collect Social Security.
The pressures have finally reach the point where the bitching is over and the time to act has arrived. Docs who enjoy medicine and would like to continue to work will quit because the financial risks are too high.
Are you willing to sign a new 5 year lease in this environment? I am not.
Insurance companies actually love the high deductable catastrophic policies... You are essentially paying them large sums of money just to get their "negotiated" prices for health care... (One of the hidden problems is an un-insured individual will pay 5-10 times the amount that an insured person will for the exact same procedure, due to the insurance companies contract rates...).
I remember getting a bill for some Thryoid surgery a few years back,
Gross Bill = $38,000 (and some change).
"Oh wait, you have insurance", Contract Rate = $ 5,000
Deducts etc applied against the $5,000. If I had gone into the hospital without insurance, I'd have been on the hook for the entire $38,000.
Talk about kicking somebody when they are down, "You don't have insurance because you don't have a job, or a job that doesn't pay enough, and now you are going to pay radically higher medical costs because you were broke to start with"...
System really is broken, (Again, on a high deductable policy, you may never see a penny in insurance money paid back to you, but at least you get the contract rate for proceedure, as opposed to the "just walked in off the street" costs...).
high deductible/catastrophic... that IS insurance. Anything else is basically a perk your employer gives you or what is now being seen a a right just because you breath. Your homeowner's policy doesn't replace your roof after 20 years because it is looking shabby and has some leaks.
If everyone gets their body rebuilt with knee, hips, cataract removal, stents, etc that cost more than they ever put into the system, where does that leave us?
Quite often, those without money or insurance simply don't pay. Many go file bankruptcy if they can. I've had two hospital stays in the last two years. I've been lucky too have the insurance and job that I have but it has taken quite a bite out of my wallet.
And those negotiated prices are only for in-network. A provider that has no contract with the insurance company may come after you for the difference.
If it's $450K worth of surgery, then yeah, that makes sense. If it's $14K worth of medical bills, or a $9K colonoscopy that is negotiated down to $972 for "insurance holders" do you claim bankruptcy and everything you lose in life after that for $14K? Lucky you had insurance and didn't have a pre-existing condition that deprived you of insurance even if you had a job.
"Lucky you had insurance and didn't have a pre-existing condition that deprived you of insurance"
FYI, that is no longer a valid argument. Under the ACA an insurer cannot deny you coverage based on a pre-existing condition. That is one of the reasons the premiums have risen - they cannot select their risk pools, they are assigned.
I have a good friend who had colitius and 3 surgerys, and until the ACA and all of it's lawsuits to stop it, he couldn't get insurance. Yay for him for the last few years, the $290K out of pocket personally before that... not so much.
I have a good friend who had colitius and 3 surgerys, and until the ACA and all of it's lawsuits to stop it, he couldn't get insurance. Yay for him for the last few years, the $290K out of pocket personally before that... not so much.
This is how you lower health care cost. You lower it onto somebody else.
What else did they think was going to happen?
They knew about this . . .
from the very beginning!!
@swmnguy - I was in your same shoes until last month, with a grandfathered plan that covered 100% after deductibles for $401/month. The chippy letter from Aetna came last month informing me that they were not selling individual plans in PA any more, but that they just happened to have a plan they thought I'd like a whole lot. $6500/yr deductible, 40% copay, all for the low low price of $900/month.
Huh ? Are they serious ? If they don't sell individual plans any more, how are they offering me a new one for over double the cost ???
Fuck this shit. I refuse to pay that; besides it's more than 20% of my income so I get a hardship exemption. I tried a health sharing organization but 1.) I don't attend church so I don't qualify for the Christian ministries and 2) Liberty Healthshare wants me to have all kinds of tests like colonoscopy etc before joining, to which I said no way. I have no alteratives - I make too much money to get a subsidy and too little to afford Obamacare.
So here's what I'm doing to avoid bankruptcy. I just upped my auto medical coverage to $100k, enrolled in accident insurance up to $100k per incident, and critical care coverage at $100k per incident, and that's what I'm going to do for insurance. My cost is about $300/month and it's probably better than an Obamacare plan any way you look at it.
I have a High Deductible Health Plan with Max out of pocket of $2500. After I've paid that with a minor surgery, everything afterwards is free for the remainder of the year. So, I had my heart checked out (echo), complete dermatology work up, free chiropractor visits for the rest of the year, free surgeries (hernia, skin surgery), free doctor visits, free blood work, free x-rays, urology, etc., free meds (meds are included in the max out of pocket cap), free everything. If I can think of anything else I want checked out for free, I'm going to have that done this year too.
I'm single (which lowers my deductible and premium) and my Health Savings Account limit of $3350 (this is pre-tax) covers all of my Max out of pocket as well as my premiums (premiums are $300/year but my employer tributes $300 to my HSA so the insurance is basically free). I'm sure this model will change because once my Max out of pocket is met, I can see any in-network provider and get any medically necessary drug and procedure for free (for the rest of the year) and BCBS is not too happy with me this year. Historically (i.e., pre-Obamacare), they would have dumped me but now they can't. I really don't feel like I'm milking the system because I have been paying for health insurance without using it for years.
Jesus Christ, that's terrible. That's exactly what I'm dreading.
What in the actual fuck is that policy? They clearly don't expect you to buy it. Good Lord. I don't know what I'd do in your situation. Maybe the same thing. I mean, if I get cancer I shuffle off all the belongings I care about as fast as I can, and start planning the bankruptcy anyway, I suppose.
Man, I feel for you.
Colonoscopy for insurance? Before they approve you? "Fuck me in the ass" insurance. It wouldn't be funny if it weren't true I suppose.
A colonoscopy is a $9K procedure. That is amazing.
Do it yourself:
http://www.toolup.com/Ridgid-40043-Micro-CA-25-Handheld-Inspection-Camer...
You are a good American.
These people complaining about the 9K colonoscopy can always buy the equipment, get a store front and charge whatever they want. T’s not like they are paying for medical insurance on their employees.
But for some reason they don’t. This is the real question.
$9k is a ridiculous amount
Yep. Bumped me to the $3000/$6000 deductible and out of pocket max. I cover 100% of the first $3000. Putting tubes in for my daughter blew through $3000 by the end of January.
I've got another one for you. The company tells me my annual total compensation. They have the audacity to tell me that them paying social security and Medicare on my behalf is part of my total compensation. As if they're paying me an extra $8k a year because they're paying this stuff. A tax. It's compensation now. Fucking A.
Cut the match on the 401k in three small cuts.
Bonus pools reduced
AND they want me to log hours by state that travel to so they can withhold taxes by state and I have to fill out a tax return by state.
Oh. The diversity training. We need to be a more inclusive workplaces for LGBT. Let's donate to this fund for support of someone else's lifestyle. FABULOUS!!!!
Driving an uber can doesn't seem so bad right now.
I feel sympathy for you on all but the ss/medicare compensation. It is compensation. They're doing us all a favor of informing the clueless (maybe not you) that there are hiden ss/medicare costs the average employee doesn't see.
As a self-employed person, 15.2% comes right off the top for ss/medicare, so feel my pain, pal. I get to pay the full cost every quarter.
Its a "dick" move by an employer to throw that shit into an employee's face. It is a cost of doing business that all employer's face. My first employer did that and I never had one do that since.
'externalisation' of costs is Mankiw 101
And I wonder how those that may not ever collect SS or medicare will see it as compensation because it went bankrupt. Will you feel it is compensation if you aren't able to recover any of that 15.2%?
It's theft, plain and simple and you ain't getting it back.
Tell me about it. I'm 30, SSDI is going bankrupt next year, and the other SS 'fund' will be gone before I am 50, give or take. The sooner the program ends the better IMO, I won't see a dime of what they stole.
I'm sorry the government steals from you at a higher rate. I don't get to deduct any of my expenses for commuting.
Robbing people of their wealth through their desire to remain alive.
Very true. And the government acts as the Mafia-like enforcer that forces Americans to buy unaffordable health insurance from insurance companies.
Government is clearly in collusion with the giant corporations. It's fascism at its finest.
It has been for some time; read "War is a Racket."
There is no reason for doctor visits and surgeries to cost as much as they do. However, I know one of the doctors on the receiving end of this largesse... real nice $700k house he lives in, up the street are the $2M places for the upper management of the hospitals. I would not want to be in that neighborhood when the torches and pitchforks come out.
"I would not want to be in that neighborhood when the torches and pitchforks come out."
Well, the hospital administrators will be boiled and eaten. The doctors can provide a useful service and may be kept around for such purposes. They'll just have to become used to subsistence living vice their previous lifestyle.
Fear sells
Well, right.
I've been self-employed for nearly 12 years now. I have a $5000 per individual deductible, $10,000 for the family. Premium for myself and two teenagers is $497/mo. There are a few things that make this plan worth keeping. It's a "100%" plan, meaning Out-Of-Pocket Maximum = Deductible. I've had this same plan for 8 or 9 years now. It's "Grandfathered-In" to ACA, because it doesn't meet ACA requirements. It doesn't cover Chemical Dependency, for one thing. I'm just waiting for my insurance company to decide to cancel it. Premiums have increaased over the years only as I get older, according to their premium schedules. Really, it's been in the 3%-5% every year.
When I look to see what options I'll have when they do cancel it, I notice there aren't any "100%" plans anymore. At my premium level, the plans are either "60%" or "75%" plans, meaning that when I've hit my deductible, I've still got thousands of dollars to pay before I hit my maximium.
We never hit the deductible. We've been lucky. The real benefit of the plan is that I get to pay the negotiated rate for services, rather than the list price. The list price is usually about 3x the insurance-negotiated rate. Basically, I pay $6000/yr in premiums so I can pay $2000 or so annually in actual services, and I have coverage in the event of a serious health problem. Without insurance, I'd be paying the same $8000/yr. for basic appointments, with no coverage outside the bankruptcy courts for a serious health problem.
I'm ineligible to use my state's exchange, because my wife has a job that provides a generous benefit to employees. Employees pay about $100/mo. for themselves, but dependent coverage is unsubsidized. Our monthly bill would be close to $1500 to cover our family on that. Maybe $18,000 a year. Maybe more.
Yep, it's completely broken. ACA merely bought some time for the Finance industry to complete loading up the getaway car and get a little further down the road before the whole thing collapses.
Is ACA a way for the big fish to destroy the small fry?
I don't know. I hadn't thought of that. But you know, you might be right.
I've seen at least one small fry insurance company in my home state of Minnesota that decided to undercut the big fish in the state Exchange. I could have bought a policy from them and saved $50 or more per month, but I didn't because I didn't know who they were and I preferred to keep my "100%" policy anyway. They sold a ton of policies; maybe tripled their number of customers; but after one year they're bailing out of the exchange and non-renewing a lot of the policies. They say they can't afford to service them at the price they sold them for. And they only sold so many policies because they had the lowest premiums per level of coverage. They wouldn't have sold them otherwise.
Because the math just doesn't work. Whether the price of health insurance, or health care itself, is justifiable or not; it's still more than a growing number of employers and households can pay. Once that tipping point is reached, the whole thing will collapse quickly. Health care-related costs have long been the #1 cause of personal bankruptcy in America.
I think ACA is a way for the government to eventually take over paying for healthcare, by some means or another. Either open up Medicare to everyone, or remove McCarran-Ferguson Act protection for health insurance companies, clearing the way for a very small number of big fish to dominate the national market and then be subsidized by the government; something along those lines.
Good summation in that final paragraph.
Crime of the Century.
That's clearly one of those "Cadillac health plans" Obama wants to tax.