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Employers put coverage in workers' hands |
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"Employers put coverage in workers' hands", by Julie Appleby, USA Today, January 24, 2008. More on
Video Clip: Paul Zane Pilzer is interviewed live on CNN re The New Health Insurance Solution, October 8, 2005.
Video Clip: Paul Zane Pilzer is interviewed live on the CBN's 700 Club re The New Health Insurance Solution, December 2005.
"When to Choose an HSA," by Kaja Whitehouse, The Wall Street Journal, September 25, 2005.
"Paul Zane Pilzer Checks the Pulse of Healthcare Insurance," by MC News, Management Consulting News, February 2006.
"Getting Cheaper Health Insurance," by Margaret Price, New York Daily News, November 16, 2005.
The New Health Insurance Solution, by Paul Zane Pilzer, Soundview Executive Book Summaries, December 2005.
Breaking from the Group, by Kevin Sweeney, Benefit News, November 2005.
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By Julie Appleby Nick Trikolas plans to drop health insurance for his employees and give them money to buy their own coverage. He says doing so will put him in the vanguard of a movement by employers searching for answers to rising health costs. "This may be the future of health insurance," says Trikolas, CEO of Ilios Partners in Chicago, which plans to switch its 100 employees from group to individual coverage this year. As health insurance costs continue to rise, some employers are adopting a controversial new approach: ending group coverage and giving employees $50 to $200 or so a month to help them buy their own. The shift is touted as a lower-cost way for employers to offer workers some kind of health coverage, while making smaller and more predictable financial contributions toward that coverage. Like other companies considering the switch, Ilios will pay a portion of employees' medical costs into tax-free accounts that workers can tap. It also will provide a link to an independent website where workers can compare price quotes from a variety of insurers. If broadly adopted, the new model would represent a fundamental shift in health coverage in the USA. Most people with health insurance are in group plans offered by their employers. Critics say the change would end the long-standing, implicit social pact to provide coverage to sick and healthy workers alike in favor of a more Wild West, go-it-alone approach that could benefit young and healthy workers but leave those older and sicker unable to get medical insurance. That's because ending group coverage removes a key protection in group insurance plans. Insurers cannot reject members of group plans for health reasons, and everyone in the group pays the same premium. In most states, insurers can reject individual applicants for health reasons and can charge widely varying premiums based on the applicant's age, health history and other factors. Only in a handful of states, such as New York, Massachusetts and New Jersey, must insurers sell coverage to everyone, regardless of their health. "What scares me is it's tempting for an employer who may have one or two sick employees to say, 'You're not my problem, try to get coverage from the state,' " says John Hickman, an Atlanta attorney who advises businesses on their benefit plans. "It could leave a lot of people without coverage." He says the new model could work if Congress passes national rules requiring insurers to take everyone, regardless of his or her health. The idea comes as the percentage of employers providing insurance shrinks and the number of uninsured Americans grows. Last year, 60% of employers offered group coverage, down from 69% in 2000. The number of uninsured rose to 46.6 million, up from 44.8 million in 2005. Large companies use group coverage as an important recruitment and retention tool, but smaller firms struggle more with costs and are less likely to offer group coverage. Proponents of individual coverage, including Paul Zane Pilzer, whose Zane Benefits firm offers services that help employers make the switch, say most workers will be able to buy coverage on their own. |
The healthiest, Pilzer says, will get coverage for less than they pay now. Monthly premiums can be less than $100 for some younger, healthier people but several times that for others. "The healthy employees don't have to pay for sick employees," says Pilzer, a software entrepreneur and author. He says employers can save money because they contribute a set amount per employee — often far less than they pay for group coverage. Sara Rosenbaum, a law professor at George Washington University School of Public Health, says offering money toward individual policies "may be somewhat helpful for workers in businesses that have never been able to offer insurance coverage," but it is a "radical step backward" for those who decide to cancel group policies. She says proponents may mislead employers into thinking individual and group coverage are the same, when there are often striking differences. "Many employees may find themselves shut out of the individual market," Rosenbaum says, "and even if they can get in, the coverage is dramatically less than what they can get in group products." Reimbursement accounts Though no one tracks the number of employers who send workers out on their own, it is only a fraction of the total number who offer health insurance. Pilzer says he has more than 100 clients; his company sets up and manages tax-free medical reimbursement accounts for the clients' employees. He sold his first company to Steve Case's Revolution Health, which offers the service through Sam's Club. "This is a multibillion (dollar) opportunity," says Vik Kashyap, founder of Canopy Financial. Last month, Canopy began a similar reimbursement service and steers workers to insurers who sell individual health policies. The insurance industry has acknowledged the difficulties some people face in getting coverage. In 2007, officials in California and Connecticut fined several insurers for canceling individual policies after patients racked up large medical bills. A proposal released last month by America's Health Insurance Plans, the industry's lobbying arm, called on states to create guaranteed-access plans that would make insurance available to people with serious medical conditions. The group said insurers should provide coverage to those who aren't sick enough to qualify for the state plans. And, it said, insurers should not cancel policies solely because applicants provided incomplete medical information, so long as any omissions were unintentional. Because individual policies are tied to each applicant's medical history, insurers can limit or exclude certain conditions. For example, an insurer may offer a person with hay fever a policy that excludes coverage of any upper respiratory condition. "Something as simple as hay fever may mean you are not covered if you get pneumonia," Rosenbaum says. |
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