By Claudia Fegan, M.D.
Hyde Park Herald (Chicago), Feb. 9, 2011
Many residents of Hyde Park work for large employers, the University of Chicago being just one example among several. In the wake of the new health law, what benefit changes can workers at these large companies expect to see?
A survey of 72 big employers like IBM, Boeing, General Electric, FedEx and others conducted last fall showed that 63 percent of these companies plan to shift more of their health premium costs to employees in 2011, and that 46 percent expect to raise the maximum out-of-pocket costs (co-pays, co-insurance and deductibles) that their employees are expected to bear, including for prescription drugs.
In other words, big employers are shifting more of the financial burden for health care onto the shoulders of their employees. Significantly, the new health law doesn’t prohibit such hikes on workers’ share of health costs, and in fact perpetuates the idea that “cost-sharing” by employees is a good thing – despite solid evidence to the contrary.
There are some exceptions to this rule, however. Some preventive services like mammograms or colonoscopies will now require no patient co-pays or deductibles. (Some employers already offer this benefit, although studies show most workers don’t avail themselves of such preventive services when they’re offered.) And patients will not incur a financial penalty if they see an obstetrician or a pediatrician without a referral.
But, in general, employees at large companies will be asked to pay higher costs for their care, and will see their wages negatively impacted by employers who will say that the rising costs of health benefits prevent them from giving workers pay raises. Much hinges, of course, on the individual employer and whether your wages and benefits are protected by a union contract.
There’s more. Under the new law, better-quality health plans face the threat of being hit with a punitive 40 percent excise tax starting in 2018. This is the so-called Cadillac tax on employers who offer decent health benefits. Because the “Chevy” plans of today are likely, thanks to rising health prices, to be the Cadillac plans of tomorrow, this could easily provoke many big employers to dump their health benefits altogether and to force workers to seek even costlier coverage in the proposed insurance exchanges.
Some beneficial parts of the new law include the removal of lifetime caps on benefits (annual limits will stay in place in many cases, however, until 2014), the eligibility of children under age 26 to remain on their parent’s insurance policy, and new restrictions on the ability of private insurers to deny coverage for persons with pre-existing medical conditions.
It’s fair to say that the new health law faces an uncertain future. Most big employers take it for granted that the law will survive efforts to repeal it or to declare it unconstitutional, and they are acting accordingly. And in fact most big companies are quite comfortable with it, as are investors who hold shares in health-related companies. They know that the law builds upon the status quo, where private health insurers and Big Pharma hold commanding positions in our system and where profits will still flow into the health industry.
Unfortunately, it’s precisely because the private insurers remain in the driver’s seat that we will suffer from ever-rising costs, from patients putting off needed care because they can’t afford it, and from the squandering of valuable health dollars on excessive paperwork. The result: even though the U.S. spends more per capita than any other nation on earth, our medical outcomes will remain far behind other industrialized nations.
I favor a system of financing care known as single-payer national health insurance, an improved Medicare for all. Under a single-payer plan, everyone would be covered, there would be no co-pays or deductibles, and everyone would have free choice of physician and hospital. A one-payer system’s bargaining clout would help us contain costs.
Vermont and some other states are taking a look at shifting to a single-payer system. Illinois should do likewise, as should Congress.
Claudia Fegan, M.D., is associate chief medical officer for the Ambulatory and Community Health Network for the Cook County Bureau of Health Services. She resides in Hyde Park. [This article was originally published under the headline “My thoughts on health care.”]