Get started
Work

The unpredictable path from group to individual policies.

Year: 2007
Type: article
Abstract: If you listen closely to the way companies talk about their health insurance benefits, says Paul Fronstin, PhD, a health analyst at the Employee Benefit Research Institute in Washington, it doesn’t take a lot of imagination to predict how they’d respond to President Bush’s latest healthcare proposal — if it ever becomes law. Start treating insurance costs as taxable income, Fronstin says, and you can expect a lot of companies to take the group insurance package they negotiate every year and jettison the whole program. “It wouldn’t happen overnight,” he believes, “but employers are desperate to do something about rising costs.” Healthy employees would get a better deal on the individual insurance market, “then the cracks would develop and that would drive it.” Besides, says Fronstin, if every employee could get the same tax break on coverage on their own, he adds, where is the advantage in employers offering it? “Why continue the headache of offering these benefits?” he asks. Wouldn’t it be better for companies to do something like offer a one-time raise and let employees find the right deal for themselves? Fronstin isn’t alone in his thinking. Others who watch the market also say that the brave new world outlined by the Bush administration makes an individual policy much more attractive. For healthy people with access to low-cost coverage, the option of buying their own insurance while reaping the benefits of the deduction could prove powerful. “Many may decide, ‘I can do better purchasing the insurance myself,’” commented Marjorie Baldwin, PhD, director of the School of Health Management and Policy at Arizona State University. “This isn’t just the offer of a tax break; it’s a fundamental change. It moves more responsibility to individuals.” If you treat health insurance as taxable income, says Paul Fronstin, PhD, at the Employee Benefit Research Institute in Washington, you can expect a lot of companies to take the whole group insurance package and jettison it. Despite plenty of criticism, the employer-based insurance system still provides the bulk of insurance coverage for Americans under the age of 65. Once you either encourage or require people to search for their own coverage, though, workers are likely to find a significantly different set of protections waiting for them than what they have now.
Author: John Carroll
Language: English
Open Access status: green
OpenAlex ID: W235241526
FWCI:
Cites:
Cited by:
Related to: 10