Making Health Insurance Portable
by admin on 06/20/2011 1:05 AMSpecial Publications | Health | by NCPA 1-30-06
One of the strange features of the U.S. health care system is that the health plan most of us have is not a plan that we chose; rather, it was selected by our employer. Even if we like our health plan, we could easily lose coverage because of the loss of a job, a change in employment or a decision by our employer. These problems affect all Americans, but lack of individually owned, personal and portable health insurance has its greatest impact on older workers, who are more likely to have health problems.
Problem: Lack of Continuity of Insurance. Virtually all employer health insurance contracts last only 12 months. At the end of the year, the employer – in search of ways to reduce costs – may choose a different health plan or cease providing health insurance altogether. Strangely, the only people with private health insurance guaranteed to last longer than one year are people who purchase insurance on their own.
Problem: Lack of Continuity of Care. Employer-sponsored health care largely evolved at a time when most health insurance was fee-for-service. Fee-for-service means an employee can see any doctor or enter any hospital and insurance paid all or most of the bills. As a result, a change of jobs usually did not cause undue disruption, provided that both the new and old employer had health insurance plans.
Things changed after the introduction of managed care. Today, as in the fee-for-service era, employees who switch jobs must also switch health plans. All too often, that means changing doctors as well, since each health plan tends to have its own network. For example, if an employee (or a member of the employee’s family) has a health problem, there may be an interruption in the continuity of care. Additionally, different employer plans have different benefit packages. Thus, coverage for some services, like mental health, may be covered under one employer’s plan but not under the next employer’s plan.
These disruptions affect some families more than others. For people who are healthy, they may amount to minor inconveniences, but for others the problems can be severe. One study of chronically ill workers found that relying on one’s employer for health coverage reduces job mobility by 40 percent compared to similar workers who obtain their health coverage elsewhere.
Problem: Perverse Incentives for Employers and Employees. Most employees view health insurance as a fringe benefit. When they enter the job market, they primarily search for employment opportunities that reward them for their skills and abilities. But a growing minority of workers approaches the job market very differently. These are individuals with a family member (often a spouse or child) who has very high health care costs. When these workers compare job opportunities, they are primarily comparing health plans. For them, health insurance is the main attraction, rather than the job or the pay.
Clearly it is not in the financial self-interest of employers to attract workers whose primary motivation is to get their medical bills paid. So, to protect themselves from such potential hires, employers are increasingly altering their health plans to attract the healthy and avoid the sick. Having small copayments for routine office visits and higher deductibles for hospitalization is one technique. Having long waiting periods before employees become eligible for the company’s health plan is another.
These reactions on the part of employers are rational responses to a labor market that increasingly is looking like a game of musical chairs. But what is good for the employer is not necessarily good for society as a whole.
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