Thursday, November 11, 2010

PhillyInc: Hints on the future of employees' health care | Philadelphia Inquirer | 11/10/2010

   There is little agreement over what the U.S. employer-based health-insurance system will look like 10 years from now.

   Some have speculated that the Patient Protection and Affordable Care Act will prompt more businesses to drop coverage. Others say that the employee benefit is too prized and that employers would be very reluctant to drop it.

   On Tuesday, the Mercer consulting firm provided some new hints about what businesses say they might do. The results of a survey of more than 2,800 employers indicates only 6 percent of companies with at least 500 workers say they're likely to drop their health coverage in 2014.

   That's the year when the state health insurance exchanges are expected to begin operating. Under the new rules, employers could drop their plans in 2014 and pay a penalty that could actually be less than their annual expenditure on health benefits.

   Among small businesses, the percentage is greater. About 20 percent of those with between 10 and 499 workers said they would be likely to drop coverage, Mercer said.

   But even if they might save money, would they do it?

   Mercer doesn't think so, citing employers' actions in Massachusetts, where insurance exchanges have been functioning for more than three years. Enrollment in employer plans there has actually grown over that time, according to a study published in the June issue of the journal Health Affairs.

   More worrisome is how a proposed 40 percent excise tax on the most generous, high-cost insurance plans might affect employers.

   The Mercer survey found that 39 percent of employers with 50 or more employees could trigger the excise tax when it first takes effect in 2018, and that might be costly enough to prompt "a significant change in health-benefit strategy."

   But that hammer is also eight years away from falling. I think employers are more concerned with how 2011 benefits will nail their budgets.

Card check

   I heard from Greg Smith, president of PSECU, a credit union in central Pennsyl-

vania, after a recent column about what various financial institutions pay colleges under affinity-card marketing arrangements.

   I'd noted that PSECU was the fourth-largest issuer behind national players Bank of America Corp., U.S. Bank, and Chase Bank USA. According to data collected by the Federal Reserve, PSECU has agreements with 13 state-owned universities.

   Smith did not think I stressed enough that his credit union's payments to those institutions are quite small compared with the $2.8 million Bank of America paid to the Penn State Alumni Association in 2009.

   "The real story here is that unlike what BA and the others would have you believe, a card issuer can actually build a very profitable program (we think cards are our most profitable asset) without financially abusing consumers," Smith wrote in an e-mail.

   "When your card is a true consumer value, you don't have to pay 7-figure sums to get schools to hold their noses while they help sell the cards to unsuspect-

ing students," he wrote.


Contact Mike Armstrong at 215-854-2980 or See his blog at


Interesting, the penalties for businesses dropping coverge for employees are still less than their annual expenditures on health benefits...

Posted via email from Personal Medicine

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