Big Firms Overaul Health Coverage

This article appeared on September 28th in the Wall Street Journal, and is a very important one.

Whether motivated by Obamacare, or just financial motives, two big companies, Darden Restaurants and Sears, have decided just to give employees an amount of money equivalent to what the companies would have paid in healthcare costs, and told the emp loyees to administer it as they see fit.

This might ultimately save employees some money, since doctors reduce bills by as much as 20% for not having to deal with insurance companies.

And, the trend towards employees paying more of their own insurance costs has risen Employees now pay, on average, about 1/3 of the estimated $14,000 it costs to insure a family, presumably of four.

Another trend worth noting is that many large companies provide catastrophic inurance coverage, say over $250,000 per incident, and self insure for regular insurance costs. This means the company picks up the expenses directly. Doctors like the idea because they don’t have to deal with insurance companies.

So, a little food for thought.   It’s not clear how Obamacare would impact this trend; one would presume that the big employers think it’s a non factor (will get repealed by R&R) or are already preparing to pay their $2,000 worker penalty to not insure. They’ve done the math, we’re sure.

Update 10-15-12: We checked with a family health provider, and the difference between the insurance price and the cash price is about 66% lower for cash. This is big.

Therefore, it seems to us that businesses might want to cover just catastophic events, such as hospital visits. Those might run $20,000 for a routine visit.

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