Envisioning the End of Employer-Provided Health Plans

[eridani]

http://www.nytimes.com/2014/05/01/upshot/employer-sponsored-health-insurance-may-be-on-the-way-out.html?hp

The idea is this: Now that federal and state exchanges exist where anyone, even those with pre-existing illnesses, can gain coverage, employers might decide to give their workers a stipend to pay for health insurance on the exchanges rather than sponsor a plan themselves.

In truth, the American system of health care — in which most people get their private health insurance through their employer — has always been rather odd. Why should quitting a job also mean you have to get a new health insurance plan? Why should your boss get to decide what options you have and negotiate the cost of them? Employers don’t get to select our auto insurance or mortgage company, so why should health insurance be any different?

If there is uncertainty around how the employer-provided health insurance system will evolve, there is even more around who will ultimately pay the bill. It could be the federal government, via insurance subsidies, or individuals who must pay for more of their health care. In a perfect world, lower costs would come from a more efficient system that provides better care at lower costs. But no one knows what the actual system of, say, 2025 will look like, any more than people could have foreseen the decline of pensions when the 401(k)

Michael G. Thompson, managing director at S&P Capital IQ, argues that the parallel with defined-benefit pension plans is an apt one. For decades, those plans were a major benefit offered by large employers. But as other options became available that allowed employers to more cheaply provide retirement benefits with fewer administrative headaches, which 401(k)s provided, employers shifted to 401(k)s en masse.

“We still expect some companies to hold on to their health care plans, just as some private companies still have pensions,” Mr. Thompson said. “But we think that the tax incentives for employer-driven insurance are not enough to offset the incentives for companies to transition people over to exchanges and have them be more autonomous around management of their own health care.”

[Thinkingabout]

1. The best result would be a national health insurance, but just a intelligent employees

know part of the pay package is getting insurance through their employer should get passed to the employee if there is a national health insurance.

[rafeh1]

2. I was always wondering why GM and friends were not jumping on ACA

I was always wondering why GM and friends were not jumping on ACA as it makes GM better compettitve with EU companies like VW Mercdes whose health costs are picked up by govt.