By Fran Hawthorne
The New York Times
September 26, 2007
Health insurance premiums have been rising faster than the rate of inflation for years. Lack of health coverage has become a major issue in the presidential race. Yet somehow, 59 percent of small businesses provide some kind of insurance, according to a recent survey by the Kaiser Family Foundation.
True, that percentage was down from 68 percent just six years ago, says the foundation, a health policy research group that conducted the study of more than 3,100 employers.
How do they afford it? By cutting benefits and shifting more costs onto their workers. There are also newer insurance products geared to this market:
HIGH-DEDUCTIBLE PLANS These are sometimes called “consumer-driven plans,” not because consumers are driving the demand, but because they must pay such a high share of the cost that, managers hope, they will use fewer services.
Because they favor healthier employees, all these high-deductible plans are controversial.
BARE-BONES COVERAGE One way to pay less is to cover less. Group Health Inc. of New York has a “catastrophic care” option that covers hospitalization only and no routine care, cutting premiums by about two-thirds. Or a company might pay for a limited number of routine checkups but not hospitalization. Other variations impose tight caps, perhaps paying a maximum of $50,000 a year.
VIRTUAL INSURANCE Even more minimalist is companies’ paying nothing, leaving employees with the whole premium. Mr. Finnegan (of Mercer Human Resources Consulting) says companies can offer coverage through a payroll deduction and might be able to arrange group rates.
PREVENTIVE-CARE PLANS Principal Financial has started pitching to this market with a plan that gives each employee 30 minutes of face-to-face counseling a year, for about $100 a person.
GOVERNMENT HELP Tennessee has started a bare-bones plan called CoverTN, with a coverage cap of just $25,000 and the state paying one-third of the premium.
http://www.nytimes.com/2007/09/26/business/smallbusiness/26HEALTH.html
Comment:
By Don McCanne, MD
Although the numbers of uninsured continue to increase, the fastest growing problem in health care financing today is the transformation from insurance to underinsurance.
Private insurers have shifted much of the individual market into various innovative underinsurance products. Until recently, employers have attempted to maintain more comprehensive coverage. That has changed.
As this article indicates, underinsurance has now permeated the small employer market, and it is rapidly creeping into the large employer sector as well.
The leading proposals for reform call for an expansion of private insurance. The great deception in these proposals is that they really are calling for universal underinsurance, since insurance that is effective in preventing financial hardship for those individuals who actually need health care is no longer affordable.
In our national dialogue on health care reform, we should discard the term “private insurance,” and call it what it really is: “private underinsurance.”