By Kerstin Nemec and Tim Norwood
Historically, the majority of employees get their health insurance through their employer. Employer funded health insurance began after the Great Depression as a way to attract good employees. By the 1950’s, about half of Americans were covered; today employer provided health insurance is considered a cornerstone of working American’s overall compensation.
Employees still believe a good employer provides insurance, takes care of its workers, and provides benefit options that aren’t available anywhere else. It’s the great American way, after all. But what happens when the price of company health insurance becomes more than the employee can afford? Employee premiums for a family plan now averages $5,000 annually, and combined with out of pocket costs for deductibles and co-pays, the overall costs can be staggering.
As the new Administration comes into office, there are anticipated, but unknown, changes expected in healthcare reform. Numerous surveys have shown that working class employees continue to be anxious about rising premiums, deductibles, co-pays, and drug costs. Many are confused over their hopelessly complex coverage options, and frustrated by bills for services they thought were covered. The biggest fear of all is the worry that they may not be able to afford coverage in the future.
With both employers and employees re-evaluating the traditional employer sponsored health insurance plan, what is a pragmatic solution to ease the burden of insurance and healthcare costs? Currently, working Americans access health insurance primarily through two avenues: 1) employer provided plans (56%), and 2) State Health Insurance Plans – Medicaid (21%). Both options can provide good robust coverage. The primary difference is cost, with employer provided plans requiring a significant premium payment, while State Health Insurance Plans are generally free or very low cost.
The need for health insurance innovation is now. Employers, especially companies with a high proportion of hourly wage employees, are aware that many employees cannot afford the health insurance, and have started building unique benefit platforms to introduce employees to the option of State Sponsored Health Care such as Medicaid. In 32 states and the District of Columbia, Medicaid has been expanded to include working adults between the ages of 19-64, with incomes below 138% of the federal poverty level (around $33,000 in most states for a family of 4). A recent Kaiser survey found that employees are increasingly aware that State Health Insurance (Medicaid) is a better deal than their current insurance, and are open to exploring opportunities to obtain State coverage.
In the past, learning about and applying for State Health coverage fell out of the domain of employer provided coverage. It was the sole responsibility of the employee to go down to the State Agency to pursue this coverage – which meant a day off of work, and often a very confusing, difficult experience. Now employers are creating unique benefit platforms and enrollment services that can guide the employee to learn more about their choices, so they can find the information they need to select the right plan. For many employees, eligibility for the State Plan is the best option, but one they may not be aware is available to them, or has been too complex to negotiate in the past.
Benefit platforms that give employees the tools to easily and quickly shop for healthcare coverages are changing the HR landscape for employers and employees. In a matter of minutes, employees can be directed to the options available to them. Medicaid expansion and platforms designed to put employees in the driver’s seat, help employees save on their healthcare costs. The combination of increasing awareness, simplifying enrollment, and assisting employees in learning about their most affordable healthcare options will directly benefit lower income employees. Employers who help their employees also help themselves by reducing the number of employees on their plan, and ultimately lowering company benefit costs.