Timothy W. Martin and Christopher Weaver published an article on The Wall Street Journal about an announcement that Walgreen Co. is making a sweeping policy change in light of approaching federal healthcare reform. “On Wednesday, the drugstore giant disclosed a plan to provide payments to eligible employees for the subsidized purchase of insurance starting in 2014. The plan will affect roughly 160,000 employees, and will require them to shop for coverage on a private health-insurance marketplace.”
So why the sudden change in policy?
Aside from rising healthcare costs (the complex causes were speedily explained by John Green in his Vlog Brothers video), the company cited “compliance-related expenses associated with the new law” as a reason for the switch.
Is this a trend?
If one’s an accident, two’s a coincidence, and three’s a pattern, then yes. According to WSJ, Walgreens is the latest in a growing list of companies making changes to their benefits. IBM and Time Warner Inc. have said in recent weeks they will move thousands of retirees from their own company-administered plans to private exchanges. Don’t forget the announcement that Trader Joes’s will be cutting off insurance benefits for part-time employees as a reaction to the new laws (this caused an uproar that was momentarily assuaged by this response from the company, covered by Time).
Is this cause for concern?
Like so many issues regarding this law, there is much speculation. And as David McRaney explains in his fun blog called You Are Not So Smart, self-fulfilling prophecy, when the prediction is related to human behavior, is proven to be a real thing. In the end, the concern for Obamacare should be something we’re all concerned with. First off, you know our stance, which is that if the government butts in, things generally cost more as inefficiencies are introduced. We obviously wouldn’t have come up with Obamacare to improve healthcare in America. That said, we’re not denying that something is wrong with healthcare in our country.
But here is a place where we worry, less as doctors and business owners, more as individuals. According to WSJ, “… [A]s companies set their contributions at fixed amounts to limit benefits spending, workers could wind up shouldering a greater share of the burden if health costs increase.” The article continues to say, “Medical prices are rising at their slowest pace in a half century, according to Commerce Department data.” However, the prices are still ridiculously high absolutely and relative to other industrialized countries, and as we know, determined by small, powerful groups of people. Fact is, the cost burdens are shifting to patients and we’re going to see them being asked to comparison-shop or make tough choices on medical care as their health plans become less generous.
This is a great moment to mention our work in direct care. We as doctors and industry insiders have the power to do business with healthcare providers. Patients generally don’t because who wakes up thinking, I should negotiate the cost of an MRI? Exactly, No one. So when we hear the “positive” of Obamacare being that patients will have to fend for themselves, while yes, in spirit of Randian free-market and capitalism, it might not be so simple. Instead, patients might get stiffed with higher prices because of that thing called inelastic demand. Which in a simple term explains the power of direct care doctors. We are selfishly fighting for our bottomline, by providing services to patients at the lowest price. We in effect are fighting to be a middleman with responsibility, and stakes in the operation. Our concern grows when patients have to start negotiating with what their insurance will or won’t cover, and have to deal with blind pricing of services.
And a final cause for concern. Remember how John Green pointed out how Americans pay more taxes relative to GDP than ALL other countries, and how most of us get nothing for those tax dollars? Well, here’s a problem that we hope the investigative journalists will look into — what happens when working people are forced into shopping for insurance on government run markets and their contribution for a plan increases? We’re concerned that they’ll still be paying taxes toward the healthcare they aren’t receiving. Again, this is such a complex issue, and not everyone is going to win or lose. However, if corporations can aggregate the data and make decisions early on that affect hundreds of thousands to millions of workers, it seems they will be in a stronger position than the layman. At that point what help was the government really?
More You Need to Know
As Obamacare took shape, President Barack Obama said people with employer-sponsored health plans would be able to keep them.
The law metes out few requirements for big employers, but its impact on the industry has instigated a climate shift.
Helen Darling, president of the National Business Group on Health, a Washington nonprofit representing more than 300 large firms says, The economic recession also accelerated the trend for many companies. Employers “were beginning to let go of the idea that they could provide benefits with no constraints.”
There has been a gradual push by big companies to move more of the costs of healthcare to workers.
Last year, at companies with 200 or more workers, more than one-third of workers had annual deductibles of $1,000 or more, according to a report by the Kaiser Family Foundation. In 2006 that number was only 10%.
Some firms may be using the law for cover as they make adjustments that aren’t popular with workers.
Walgreens’ new arrangement is to take effect in 2014. The firm will then pay employees a fixed amount for them to choose coverage options in a private insurance exchange that will be run by Aon Hewitt, a consulting unit of Aon PLC.
According to the WSJ, the new insurance exchange will offer up to 25 different plans in some states. (Not sure that this is a good thing since few people have the time and wherewithal to make a smart choice when confronted with this many options. The buzzword is decision paralysis.)
Bare-bones plans will be available with higher deductibles and leaner coverage. These sound on the surface like the wrap-around plans we’ve been encouraging. We’re not going to complain about this possibility.
Here’s some relief — “Workers could have premiums costing as little as $5 a month, Walgreens says, to appeal to the 36% of its employees who are single and under 30 years old.”
And here’s the not so relief — “It isn’t clear how much money the move might ultimately save Walgreens or whether its workers will face higher costs. Mark Englizian, Walgreens’ vice president of compensation and benefits, said the submitted bids for monthly premiums for the private exchanges were roughly equal to its current 2013 rates—meaning some savings could come from the fact the bids didn’t factor in year-over-year increases.”
What are some other companies doing in light of Obamacare?
Trader Joe’s Co. said it would end coverage for part-time workers. The privately-held grocery chain said in a statement it would give those workers $500 to buy insurance elsewhere.
The United Parcel Service Inc. has flip-flopped, saying it would end benefits for 15,000 spouses of its employees who are able to get coverage through their own employers. However, UPS said this Tuesday that no spouses would become uninsured as a result of the federal healthcare reform.