Are you a business operator in shock over rising medical insurance quotes? Some companies are looking at sending employees to India to cost costs on expensive operations. The United Steel Workers union blocked Carl Garrett's trip from North Carolina to India to receive shoulder surgery.
Garrett's trip was intended to be a test case for Blue Ridge Paper's plan to offer its employees and their dependents the option of seeking medical care overseas beginning in 2007. For several years, the company failed in its attempt to obtain discounts from healthcare providers for its 5,000 covered workers.
The self-insured company decided to contract with IndUShealth, a Raleigh, N.C., firm that sends patients to Indian hospitals for major savings compared with American hospital care.
Garrett quickly volunteered, mostly for the financial incentive. The operations he was scheduled to have would have cost $20,000 in India compared with about $100,000 in the US. The trip was expected to save the company $50,000, and he was being given a share of the company's total savings. Aside from not retiring in medical debt, Garrett was eager for the opportunity to see the Taj Mahal as part of a two-day tour before his procedure.
But the plan alarmed the USW. "We made it clear that if healthcare was going to be resolved, it would be resolved by modifying the system in the US, not by offshoring or exporting our own people [to receive medical care]," says union representative Stan Johnson, who stepped in to stop Garrett's trip. The USW has more than 850,000 members.
The USW fears that trips abroad to receive medical treatments will become mandatory. This fear seems plausible for some procedures. The article quotes a TowersPerrin study that found American corporations are cutting annual raises by 1% in order to pay increased health care costs.
A trip all the way to India can be a grueling ordeal. Depending on where you are going in India the trip could involve as many as 4 flights over 24 hours or longer. For some types of illness that'd be hard, even hazardous to one's health. For example, the time sitting in an airplane would put one at risk of blood clots and for people with circulatory problems the risk would be much greater. But for other problems the trip could be fun. Mr. Garrett was looking forward to sightseeing while there.
A recent Kaiser Family Foundation study found that medical insurance premiums paid by companies rose 7.7% this year and while that is down from previous years it is still about twice the rate of inflation.
Washington, D.C. – Premiums for employer-sponsored health coverage rose an average 7.7 percent in 2006, less than the 9.2 percent increase recorded in 2005 and the recent peak of 13.9 percent in 2003, according to the 2006 Employer Health Benefits Survey released today by the Kaiser Family Foundation and the Health Research and Educational Trust (HRET). Key findings from the survey were also published today as a Health Affairs Web Exclusive.
This year’s survey recorded the slowest rate of premium growth since 2000, though premiums still increased more than twice as fast as workers’ wages (3.8 percent) and overall inflation (3.5 percent). Premiums have increased 87 percent over the past six years. Family health coverage now costs an average $11,480 annually, with workers paying an average of $2,973 toward those premiums, about $1,354 more than in 2000.
“While premiums didn’t rise as fast as they have in recent years, working people don’t feel like they are getting any relief at all because their premiums have been rising so much faster than their paychecks,” said Foundation President and CEO Drew E. Altman, Ph.D.” To working people and business owners a reduction in an already very high rate of increase just means you’re still paying more.”
The bigger health care costs get the greater the lengths companies will go to control them. Send people abroad to save $50,000 on expensive procedures? From the perspective of business owners, sure, why not?
I am surprised to learn that employer use of high deductible Health Savings Accounts (HSAs) has not grown much.
While there is substantial debate about consumer-driven health care, the survey finds modest enrollment in consumer-driven plans, with 2.7 million workers in high-deductible plans with a savings option, including those that qualify for Health Savings Accounts (HSAs). About 4 percent of covered workers are enrolled in such plans, a rate statistically no different from last year. Relatively few firms that offer other types of health insurance say that they are “very likely” to adopt high-deductible plans that qualify for an HSA (4 percent) or that are associated with a Health Reimbursement Arrangement (6 percent) in the next year.
My guess is that as costs continue to rise and employers get higher and higher quotes from insurance providers employers will eventually take a much more serious look at high deductible HSAs.
How have employers slowed their own premium payments growth? By shifting costs onto employees.
Workers’ contributions toward premiums. On average, workers are paying $259 more this year than they did last year toward the cost of family health coverage.Workers at small firms (with three to 199 employees) on average contribute significantly more to their premiums ($3,550 for family coverage) than workers at larger companies ($2,658 for family coverage). On average, workers this year are paying about 16 percent of premiums for single coverage and 27 percent of premiums for family coverage, with their employers paying the rest. That share is essentially unchanged in recent years.
The employees are paying a lot of those costs in after-tax dollars. So every dollar saved by employers costs more than a dollar to employees. Given the lower raises and the higher cost of out-of-pocket medical expenses what is the end result for the average American worker's buying power for non-medical purposes? Is the average worker experiencing a decline in money available to spend on non-medical purposes? Or at least is that happening to older age brackets?
|Share |||By Randall Parker at 2006 October 01 10:14 AM Economics Health|