In 2020, Workers Will Decide Health Benefits
|By Bill Toland, Pittsburgh Post-Gazette|
|McClatchy-Tribune Information Services|
If and when that day comes, it would mark a major shift for the nation's health care apparatus and a reversal of the method by which health insurance has been furnished to American workers for decades -- through a defined-benefits plan selected by an employer.
In 2020, private health "exchanges" will be the predominant way that health care benefits are delivered in this country, said
That transition took two decades, but now, for anyone under the age of 35, employer-subsidized retirement -- where it still exists, that is -- generally means a defined contribution.
"Our prediction in health care is that a similar transition will happen, [but] it will happen more quickly,"
Private health insurance exchanges -- some of which already exist -- work like this: Instead of an employer negotiating a standard benefits plan or two for its employees, companies instead make a defined cash contribution to employee accounts. Employees then use the cash to select from a menu of a half-dozen or so health plans, with varying price levels of coverage.
Exchanges are set up and managed by health insurers (such as Highmark), benefits consultants (such as
Businesses have dozens of plans to choose from within the exchange "universe" -- health as well as dental, vision and others -- but that list is whittled down to a handful before the plans are finally offered to employee groups.
These are called private, or closed, exchanges because the policies are available only to company employees -- not to the population at large, as is the case with the national and state-based marketplaces that came online
Right now, said
Highmark began offering large employers access to its "MyBenefits" exchanges
"There's a lot of interest,"
That's partly because, despite the 401(k) analogy, there's not much immediate cost savings in a health exchange, particularly for large groups. When big employers moved away from pensions and toward defined contributions, the point was to reduce immediate retirement costs and unload a major financial liability going forward. Today, less than 30 percent of Fortune 100 companies offer a defined-benefit retirement plan to new salaried employees.
But with health exchanges, big, self-insured employers that now pay all of their own medical claims will continue to do so. The impetus to move to an exchange, at least among larger employers, won't come from claims savings but rather the opportunity to offer a wider array of health plans to employees and to offload some of the benefits administration now handled by human resources departments.
The real savings will come for fully-insured small-and-mid-sized groups,
They'll be able to offer far more variety to employees, and the entire process will happen online. "It really streamlines administration," he said.
If they "move onto [the] exchange, they get five medical options, four dental, four vision" plans, he said. Employees can choose the plan that is best for them and their family.
While the pension analogy is the one most commonly used to describe the shift,
A decade or so ago, people might have been skeptical of the online shopping process, but not anymore -- at least, not in retail.
But they soon will be. Part of it is just the ubiquity of the Internet. Part of it is getting used to health care as a retail market. And part of it, said
"The mindset for decades was, for most people, 'My employer provides it,' "
That era is ending, and
"The one thing I'm waiting for is someone really big to make a move [to exchanges] --
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