"...resisting the temptation might be the smarter move."
Sure, offering to purchase a $6,000 platinum plan on the ACA exchanges for your employee who is a hemophiliac currently costing your company $300,000 a year is tempting. Then all of that cost is shifted off your bottom line. But resisting the temptation might be the smarter move.
Even though in the wild,wild west called the land of Obamacare, this practice has not yet been deemed illegal – it may only be a matter of time.
Many employers see the opportunity and have been asking us if this is allowed. There are even some benefit specialists considering launching this move as a marketing campaign. But beware! Looking at similar situations, such as employers trying to move workers 65+ totally over to Medicare, have been declared illegal. We’re advising companies given the Medicare precedent, Obamacare will likely do the same. It’s just a question of when.
Health spending is largely driven by patients with chronic illness such as diabetes or who undergo expensive procedures such as organ transplants.
Let’s think it through. Since most big corporations are self-insured, shifting even one high-cost member out of the company plan could literally save the employer hundreds of thousands of dollars a year. But what are the consequences?
First, with such an employer-dumping strategy, you would eventually see erosion in employer-based coverage. Here's how it might work. The employer shrinks the hospital and doctor network to make the company plan unattractive to those with chronic illness. Or, the employer raises co-payments for drugs needed by the chronically ill, also rendering the plan unattractive and perhaps nudging high-cost workers to examine other options. At the same time, the employer offers to buy the targeted worker a high-benefit "platinum" plan in the marketplaces.
"You may have moved one sick employee off your plan, but at what cost to the rest of your employees..."
You may have moved one sick employee off your plan, but at what cost to the rest of your employees who now see less hospitals & doctors to choose from in your network, as well as an increased co-payment for drugs, if they’re next to develop a chronic illness. Then what do you do with them? Do you keep whittling down your plan? Do you keep trying to dump sick employees? Where does it end? How would this strategy affect your ability to attract and retain top talent?
Second, this approach would quite quickly increase the premiums you’re paying for those sick employees on the exchanges as well as increase the tax burden we all share to subsidize the exchanges. Again, let’s think about it. You’re just playing a shell game. You’re not reducing the cost – only shifting it to the exchanges and away from your bottom line. It’s true that, to begin with, your company’s savings would seem worth it – until exchange insurers having all the sick employees shifted to them raise premiums, and the tax subsidies we all pay increase as a result. And, eventually, this dumping strategy may very well spell the demise of the ACA and exchanges all together. Then your company would be back to square one.
Perhaps, we all should instead be addressing the two elephants in the room – how to reduce healthcare costs and how to assist your employees in becoming healthier.
Strategies much more sustainable and worthy of our time and money.
Source: Hancock, Jay. Kaiser Health News, “Employers Eye Moving Sickest Workers to Insurance Exchanges,” 5/8/2014 http://www.kaiserhealthnews.org/Stories/2014/May/07/shifting-employees-to-exchanges.aspx 2/3
Rylan Klaseen & Associates
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