Thanks for Offering, But. . .

Brad Cain, for HealthLeaders News, December 5, 2007
A handful of articles has crossed my desk recently detailing a growing and somewhat troubling trend in workplace health benefits--one that could have long-term ramifications for the group and individual health plan markets.

The reports note that increasing numbers of workers are opting to forgo the healthcare coverage offered by their employer and instead find a health plan to cover themselves and their dependents on their own. The move is a reaction to the ongoing trend of more costs being shifted onto the end-user in recent years, which has increased the financial burden on working families.

A recent survey of employer sponsored health benefits by the Kaiser Family Foundation noted that the average monthly premium paid by a worker with individual coverage has more than doubled since 1999--rising from an average of $27 a month at the turn of the millennium to $58 a month this year. For family coverage the jump is even more significant, climbing from $129 a month to $273 a month over the same time span. The increase in large part has been due to the overall increase in healthcare premiums, not to specific changes in the benefit packages. The survey noted that the percent of premium paid by the worker has remained relatively stable at 16 percent for an individual and around 28 percent for family coverage over the past few years.

Still, the trend of dropping employer sponsored coverage--if it becomes widespread--could have negative consequences for employers and those workers who remain in company-sponsored health plans.

In light of the underwriting involved with individual health policies, it's safe to assume that those dropping their employer-sponsored coverage are among the healthier workers in the workplace--or at least not the ones with chronic conditions or a history of cancer. So the exit of these healthier bodies will degrade an employer's risk profile leading to higher premium costs and the employer possibly dropping coverage down the line.

Beyond employers, the trend has implications for insurers and politicians as well. A shift away from group health coverage means insurers will have to invest more on selling and administering these policies, including investing more in the underwriting process (see California's recent crackdown on post-claims underwriting and the slew of lawsuits over the practice). The trend also adds another variable for our elected representatives to consider as they continue the debate over healthcare reform.

Brad Cain is editor of California Healthfax and executive editor for managed care with HealthLeaders Media. He may be reached at
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