Buying Group Health Insurance Can Be a Bureaucratic Nightmare
It is a widely held assumption that the free market just can’t provide health insurance without government intervention. I have previously written about the ways in which the federal government intervenes in free markets in ways that prevent a competitive market for health insurance — but every time I turn around, I seem to find yet another example of how the federal government injures poor people by regulating the health insurance market.
I am adjunct faculty at a community college. Partly because the College of Western Idaho has only been in operation since 2009, most of the teaching is done by part-time instructors, who get no health insurance benefits. A few of us have full-time jobs somewhere else that include health insurance, but most adjuncts are not that fortunate.
At the same time, because we all have at least a master’s degree, and are teaching the next generation, we are paid very poorly — only a bit better than minimum wage, if you include the time we spend preparing curriculum and grading papers. If you ever wonder why so many college instructors lean well to the left, and start salivating like one of Pavlov’s dogs when they hear phrases like “social justice,” well, I think you can figure out the connection.
Because adjuncts are so poorly paid, many of them simply cannot afford to buy individual health insurance plans. Even with a high deductible ($5000) insurance policy, this turns into $800 – $1000 a month for individual health insurance for a family, and many adjuncts are fortunate if they net $2000 a month during the semester.
The adjuncts made a request to the college to offer some sort of group health insurance plan. We know that being a public institution, the college can’t actually afford group health insurance for the part-timers. The hope was that they could organize a plan that the hundreds of adjunct faculty could join, and pay at the substantially more reasonable group health insurance plan rates. The college was willing to do this — but when they started making inquiries, they found out federal law prohibits this. Federal law requires an employer to pay at least half the costs of any group health insurance plan. Even if employees are willing to pick up the costs, this is prohibited.
Tell me about it. For people who are self-employed, the story gets even worse. The insurance companies out there don’t even want to talk to you and the only policies that are available to people in some states (like New Jersey) are incredibly expensive and go up about 20% each year (so much for Obamacare “bending down” the cost curve).
This is insane. I even asked my own Congressman about Health Insurance Savings Accounts in my state. It is Federal law and you must be allowed to have one if you want one, but the problem is that almost no insurance companies will give you a policy for one in my state should you decide to go down this road. In addition, if you have a Health Savings Account in New Jersey (assuming you can even get one), the cost of the actual insurance is still so high, that your savings is actually not that much differenct than having a regular policy, espcially if you factor in all of the addtional paperwork you’re going to have to go through to maintain that account.
So, yes, it’s great if you can be part of say, A UNION, and get all the benefits in the world for no money (like the teachers in this state). But if you have the nerve to be self-employed, well then you’re just out of luck, bud.
There are problems out there that need to be addressed. Pronto. With a good solution. But Obamacare is not it, turning the entire sysyem into socialized medicine, driving costs up, causing physicians to retire, run by an incompetent bureaucracy.
Health care reform is like a tube of toothpaste- if you push on one part, the toothpaste will just go a different way unless there is comprehensive, total reform. Which Obamacare is not. And we’re all going to be squirted right into the individual exchange system because the pressure of obamacare will force the employers to do it. If they were serious about true health reform of the present system, tort and pharmaceutical industry reform would have been part of the package, and that would have lowered costs to help employers keep providing coverage.
But they’re not serious- this program was rushed through so quickly and haphazardly with so little regard for unintended consequences and cost that I am forced to deduce that they really don’t care- it’s just temporary. When it falls apart, the gov’t can just quit pretending and go ahead and socialize health insurance premiums along the lines of what a lot of Northern European countries have.
I think of Obamacare as a spending and bureaucracy increase with health insurance changes as a side effect.
There are problems with the system, yes. But that doesn’t mean that there shouldn’t be access to affordable health care available to those who need it the most. It’s always incredibly tragic when the health care system fails the people it’s sworn to protect. If anything group health insurance may work for some to help them receive affordable and quality coverage. Health care costs are definitely getting higher, but just think of the debt new doctors are carrying, it’s incredible.
I would go a step farther by adding the following reforms to how people spend money on healthcare:
1. Make Health Savings Accounts open to everyone. They’re far superior to HRAs and FSAs which is why so few people are allowed to have them.
2. Uncap HSAs or cap them at $20k/year in contributions.
3. Remove the age limit on contributing to a HSA. Parents should be able to open a HSA when their child is born and their kids should be able to help them pay for one when they’re 90.
4. Allow employers to divert 25% of their Medicare and Medicaid contributions to their employees’ HSAs as a employer supplement or matching money.
I would also suggest the following free market reforms:
1. Total price transparency in advance in terms someone with a high school diploma can reasonably follow. It is ridiculous that the medical profession can get away with such opacity in its pricing.
2. Raise the standard of evidence required to prove medical malpractice to “reasonable doubt” and require the plaintiff to demonstrate that it was not human error which a competent and careful medical professional could reasonably make. There is a difference between a surgeon accidentally nicking something while carefully working on a patient and a surgeon leaving medical supplies inside the patient, for example.
Without question. There are so many aspects to the current scheme that are wrong: if you are self-employed, you can deduct health insurance premiums as long as they are less than your net income from the business. If you are employed by someone else, you cannot deduct health insurance premiums at all. Yet another method for screwing people with poor jobs–yet the Democrats claim to be the party of the little guys!
An employee cannot deduct health insurance premiums, but neither is he taxed on the portion of his compensation that is in the form of “benefits” such as health insurance. All the incentives are perverse and contribute to the excessive demand for medical care.
This ties in with the constant complaint that government is the problem, not the solution.
Imagine trying to push a thumbtack into a bulletin board using a 20 pound sledgehammer instead of your thumb. Same thing happens when government tries to “right a wrong”. They get the thumbtack into the bulletin board all right, but now there is a huge dent in the board and in the course of inserting the thumbtack the board was knocked to the floor and the frame broke.
This is a striking illustration of what happens to workers given the unholy alliance between the public employee union and the government. In this case, the college professor’s union who has negotiated full-time employment right out of existence except for those who are already in the club- the full time (and especially, the tenured) faculty. And even if the local union wasn’t able to exact so many concessions, I’m sure the rules are just lifted from other colleges in the state, because often these things are negotiated statewide.
And the unions have a willing accomplice because even without them, the government is more than happy to tell employers all the benefits that they have to provide. Hence, the college is forced to hire adjuncts to get out of paying those benefits, and the government knows this. So they still try to force them into paying for your insurance with this absurd rule. Don’t think this law is to help you by forcing the college to pay for even part-timers’ benefits (as you have found, it isn’t). It’s about punishing employers who dare to try an end run around the onerous regulatory burdens that made them stop offering benefits in the first place.
Idaho is a right to work state. The full-time faculty don’t have a union.
That’s good, I didn’t know that. That’s why my second paragraph contains the phrase “even without them (the unions), the government is more than happy to tell employers all the benefits they have to provide.” Unions make that easier, but the government seems to want to do it anyway, given the chance.
The fact there is no union driving the gravy train in Idaho makes the state government even more culpable. They’ve made the rules, and they’re simply closing off a loophole with this law. It’s obviously written not to help the part-time employee, it’s to punish the college for cutting back to part-time employees in the first place.
In other words, the gov’t is telling the college: “You’re hiring adjuncts to get out of paying for benefits. Guess what? We’re still going to make you pay benefits.” The state gov’t is hoping is that the adjuncts will pressure the college to do what they were told to do all along- pay for health insurance. That is what the state wants. They don’t care about what happens to you, except in the abstract, which bears little resemblance to reality.
Texas is a right to work state also but the teachers belong to the TEA. Not a Union but operates like one and has a huge lobby.
Clayton,
There is a basic error in this article, for fairly healthy people, individual health insurance is substantially less expensive than group health insurance.
Now that may not be the case in Idaho, if I go to ehealthinsurance.com and run quotes I see only three companies, Blue Cross of Idaho, PacificSource and Regence Blue Shield. Now go to Colorado and run a quote and there are plans from 8 companies and I’m aware of another company that is most likely in both States.
I would stop and ask myself why there are so individual plans offered in Idaho. The answer most likely involves the Idaho department of insurance and your state legislature.
Regarding the employer contribution of 50%, at least some of the thinking has to do with the tax deduction of insurance premiums by the corporation.
Employers with low wage employees not offering major medical plans. That’s the main reason that there are so many Obamacare waivers. The companies that are offering coverage are offering lower cost “mini-plans” that provide some coverage but are not really major medical plans.
Back to the cost of group insurance. Have you ever heard people complain about the high cost of COBRA? COBRA insurance is the exact same insurance they had with their employer except they are paying “list” price, that is the total price that was being paid to the insurance company before from both the employee and the employer, is now being paid totally by the ex-employee.
If your group of adjunct Professors was able to get some type of group coverage that you paid for yourselves, here is what would most likely happen:
1. Everyone would be shocked at the price
2. Everyone would to to ehealthinsurance.com and look at individual plans. All the moderately healthy and healthy people would then decide that individual pricing was not so bad. These people would get their own individual policies.
3. Now the group is full of people with pre-existing conditions and guess what, the group plan just got more expensive.
Caveat: Since the individual market in Idaho doesn’t appear to be very competitive my example may not work that great there. However it will be the case in almost all states with a number of “name brand” providers.
Here in Idaho, individual health insurance is substantially more expensive than group health insurance plans. Yes, COBRA coverage is expensive, because it is usually a low deductible policy. High deductible plans, while still expensive, are much more reasonable per month, and for those who are not insured, a high deductible is indistinguishable from what they have now–except what they have now won’t help if something catastrophic happens.
The fundamental flaw is the statement “for fairly healthy people.” Yes, I suspect that for a bunch of 20-30 year olds, that might be a true statement. But in any population, there are going to be people in their 50s and 60s who, if in good health, are going to be considered (and correctly) higher risk than the people in their 20s and 30s. That’s who benefits from the group plan–and even the people in their 30s may prefer to be part of a group plan now so that they can be sure of getting better rates when they are in their 40s and 50s (as happens with startling speed), or in the event that some catastrophic health problem develops.
When I was a contract engineer at Boeing 2008-2009 I had to buy my own health insurance. We found a policy through either Regence or Premera (both are part of BCBS) that covered my family (me, wife, and 2 small kids at the time) for $330/month. It was an HSA qualified plan, with a $5k deductible, and $10k max out of pocket per year. Regular checkups, child immunizations, etc were paid at 100% and didn’t count into the deductible.
I don’t know where you get the $800+/month expense from. That is not reasonable unless you’re talking people in their 50′s or older, or in general poor health. And I’d assume that most adjunct faculty you work with are not that old, even if you are, and that most are reasonably healthy.
Those that are older, or less healthy will have to expect to pay more of course.
For $330 a month it sounds like your plan might have been capped. Was there a policy limit for medical coverage? Just wondering.
I don’t remember what the lifetime cap was if there was any. I certainly wouldn’t have taken it if the lifetime cap was anything under $3mil. For some reason I’m thinking $5mil but I could be wrong.
There was definitely no annual cap. There’s no way I’d ever have accepted a policy with an annual cap.
We appear not to have a very competitive market here in Idaho. While many of the adjuncts are indeed in their 50s and 60s (I am 54), even adjuncts with small children tell me that individual coverage for their family came to $800 a month.
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