July 25, 2001
“Employers faced with rising health care costs and increased employee contributions to pay for those health benefits are finding a win-win solution in supplemental insurance.”
Cherie Tibbetts, vice president for products and marketing at Colonial Life and Accident Insurance Company:
“Employees may be forced to select lower levels of coverage or plans with higher deductibles in order to afford their major medical insurance. That can leave them with coverage gaps or increased financial exposure in the event of an accident or serious illness.”
Comment: Although this press release from Colonial is obviously for marketing purposes, its implications are far more ominous. The current move to “empower” patients in the health care marketplace by making them more sensitive to health care costs through increased cost sharing has created coverage gaps large enough to warrant the opening of the market to supplemental insurance.
We already have extensive experience with supplemental insurance in the form of Medigap coverage for the Medicare program. Medigap has proven to be one of the worst insurance values based on the very high administrative costs compared to the relative paucity of benefits. Also, it is not affordable to those who need it the most, the Medicare beneficiaries who cannot afford the out-of-pocket expenses of the current program, yet do not qualify for Medicaid coverage.
To expand this concept to employment-linked coverage portends disaster. Diverting more health care dollars to this egregiously inefficient, middleman industry removes even more dollars that should be destined for patient care. This deficit will have to be taken up by the patients themselves. The deficits will be large enough to affect the affordability of health care for average-income wage earners. Thus the problems of the uninsured and underinsured will no longer be the exclusive domain of lower income individuals; it will be the problem of Mr. and Mrs. Average America and their children. The only good news about this is that finally the majority of voters will recognize the need to replace our sick system with publicly administered, universal health insurance. Then we’ll have decent health care for everyone.