Tough health care medicine for Target workers
By Chris Serres
Star Tribune
May 11, 2006
Stung by rising health costs, Target Corp. is now offering private health accounts funded in large part by individual employees. The Minneapolis-based retailer also is considering taking the unusual step of dropping its traditional health insurance coverage altogether for high-deductible plans coupled with private savings accounts.
One of Target’s two new alternatives is a high-deductible plan coupled with health savings accounts (HSAs), which let users set aside money in accounts to spend as they see fit on medical needs. Unspent money stays with the employee from year to year and job to job and grows tax-free.
The other option is a high-deductible plan coupled with health reimbursement accounts, which are similar to HSAs, except these accounts are funded by the employer and do not transfer if a worker changes employers. This plan has much higher premiums, but the deductibles are lower than in Target’s HSA.
(For the HSA option) Target annually will contribute $400 for individual employees and $800 for families. Monthly premiums will drop to as little as $20 for individuals with Target covering the rest of the insurance plan premiums.
But deductibles will be much higher than Target’s traditional plan: up to $5,000 for families, including Target’s contribution. So a Target worker who incurs a $5,000 medical bill but has only $1,000 socked away in a health savings account must pay the remaining $4,000. Target pays 80 percent of expenses beyond the deductible and all expenses once a maximum out-of pocket level is reached — up to $8,800 for families.
Documents provided by Target employees to the Star Tribune offer a rare, detailed window into how one company is trying to resolve the problem. In the documents, Target touts the changes as part of a broader effort to encourage employees to take increased responsibility for their health care spending, which the company believes will help reduce costs.
“Think of it like the retail business — when people are spending their own money, they want the best value at the best price,” says a guide given to employees.
http://www.startribune.com/535/story/427778.html
Comment:
By Don McCanne, M.D.
So Target wants its employees to “take increased responsibility for their health care spending.” How many Target employees do you suppose can afford to pay $4200 out-of-pocket after the $800 health savings account is depleted? Target is really asking them to take personal responsibility for the medical debt they accrue.
The decline in protection provided by private insurance plans is a one-way street. It will only get worse.