January 09, 2013

Think About it…….                                                                                January 09, 2013

Remember when the President promised that Obamacare would reduce the cost of health insurance?  Obama said… “Under [our] plan, if you like your current health insurance, nothing changes, except your costs will go down by as much as $2,500 per year”. The law, Obama told us, would magically eliminate the mythical “free rider program” by massively subsidizing health spending for the lower middle class.

Well, the Office of the Actuary in the Centers for Medicare and Medicaid Services recently put out its annual projections of national health care spending. And, contrary to the President, the actuaries find that Obamacare will dramatically increase the near-term growth rate of health care costs. In 2014, the actuaries find that growth in the net cost of health insurance will increase by nearly 14 percent. The growth rate of private insurance costs will see a whopping 88% increase.

 Because health insurance costs are increasing dramatically, The Alaska Policy Forum says that some affected employers are switching from a plan that covers all employees for a specified cost to a cafeteria-type plan in which the employee chooses a particular plan that fits their needs. The average annual family health insurance plan costs an employer about $16,000, according to the Kaiser Family Foundation. Under this new arrangement, employees can pick the health insurance plan based on their needs. For example, a single, young, healthy employee could choose a high deductible, catastrophic insurance plan for minimal costs and pocket the difference between the premium cost and the cash the employer provides. The employee gets an immediate pay raise.

On the other hand, a married employee with several children could choose a plan with a low deductible and use all the cash the employer provides to pay the premiums. This is very similar to buying car insurance because the responsibility for choosing coverage is on the car’s owner. One can buy the minimum required liability insurance or add collision and comprehensive coverage, depending on one’s needs and the value of the car.

Similarly, the responsibility to choose health insurance is on the employee and the employee can tailor the insurance based on individual needs. When the person is held accountable and connected to the cost of health insurance, that person would most likely not “overuse” the medical service. This might also encourage healthier habits and behavior.

A Kenai Peninsula Borough employee costs the Borough and the employee well over $19,000.a year for health insurance.  A teacher in the Kenai Peninsula School District costs the District and the teacher more than $17,000.a year for health insurance. A teacher in the Anchorage School District costs the District and the teacher more than $21,000.a year. Both the employee and the District, Borough or the State could save significant money by changing to this cafeteria-type health insurance plan.  The State of Alaska, for instance, spend more than $600 million dollars last year on health insurance for current and retired employees.

It is time for all public agencies, City, Borough and State, to seriously investigate the cost of savings to everyone by transitioning to this type of tailored health plan.

Think About It!      JCD     01-09-13

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