The Boston Globe
November 25, 2004
Employers try shifting health costs
Plans ease sting for those at lower end of pay scale
By Kimberly Blanton
To make healthcare more affordable to employees of all incomes, companies like Wachovia Corp… are adopting what are called salary-based health plans. Under the plans, employers pass on more of their rising healthcare costs to well- compensated executives than they pass on to lower-paid workers who can’t absorb the dramatic premium increases. Beginning Jan. 1, Wachovia will pass on larger premium increases to its executives around the country than to, say, its bank tellers.
Liberty Mutual is putting in place a salary component in an overhaul of its entire employee health plan designed to rein in future health expenses… Employees on the family plan who earn less than $50,000 will pay a $300 annual deductible, and their out-of-pocket costs for treatments will be capped at $1,500 per year. If their salaries fall between $50,000 and $99,999, the family deductible rises to $750, and maximum out-of-pocket costs rise to $2,250.
Executives earning $100,000 or more pay the most for a family plan: a $1,500 deductible and $4,500 out-of-pocket. In contrast to Liberty, most employers use tiered salaries only to set premium levels or annual premium increases.
“We wanted something that would not be way out there in terms of peoples’ ability to pay,” said Helen Sayles, senior vice president of human resources. “We felt it was the right thing to do.”
http://www.boston.com/business/articles/2004/11/25/employers_try_shifting_health_costs/
Comment: One of the more important goals of comprehensive health care reform is that the funding of health care should be equitable. Considering the relatively high costs of health care today, lower income individuals are not able to fully fund their portion of an appropriate level of health care utilization. To achieve equity, higher income individuals would pay more into the system.
It is certainly admirable that employers are attempting to establish equity within our fragmented system of funding care. Unfortunately, these efforts within small microcosms will amount to only a tiny mini-step towards health care equity for all of us.
The tax system provides the most effective agency for equitable funding of health care for everyone. Tax policies such as tax deductibility or tax credits can be developed to improve equity. But if applied to our current fragmented system, we would see a perpetuation of the inequities of thousands of plan designs with varying deficiencies in coverage or even total lack of coverage. Also our fragmented system is not adept at reducing the waste of administrative excesses nor the waste of ineffectual technological excesses.
Let’s follow the example set by these compassionate employers, but go them one better. Let’s support an equitable health care system for everyone:publicly funded social insurance with simplified public administration.