posted on 05 November 2015
from EconMatters, EconMatters.com
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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