Jobs Up - Group Health Insurance to Follow?
Clouds remain in the U.
S.
job market, but the sky has apparently stopped falling.
This news, according to the Labor Department's latest data, is bittersweet for hundreds of thousands of Americans who are still without full-time employment and running out of options for health coverage when COBRA subsidies run out.
Wall Street was bracing for a loss of 130,000 jobs in November.
But only a tenth as many were shed - the best employment outlook since the recession statistically began in November, 2007.
The raw numbers seem to provide solid evidence of economic recovery.
But as we peer into the rearview mirror, economists warn that the worst may be behind us but there will be more bad news to come; specifically when it comes to group health coverage.
Aetna, one of the nation's largest group health insurance providers with 17 million covered individuals, announced recently that it will force some 600,000 from its group/employer client group through sharp premium increases in favor of bigger profits for its shareholders in 2010.
This after the company eliminated about 1,600 positions from its employee rolls earlier this year to cut costs.
"The pricing we put in place for 2009 turned out to not really be what we needed to achieve the results and margins that we had historically been delivering," said Aetna chairman and CEO Ron Williams.
"We view 2010 as a repositioning year, a year that does not fully reflect the earnings potential of our business.
Our pricing actions should have a noticeable effect beginning in the first quarter of 2010, with additional financial impact realized during the remaining three quarters of the year.
" Not surprisingly, Williams' straight-forward admission that Aetna is in the business to make a profit and a profit it shall make is generating criticism among those in the private sector and those members of Congress who favor a Public Option as part of the controversial healthcare reform package; especially given the latest projections about the plan.
Consider this:If the Senate bill becomes law, the Government Accounting Office (GAO) projects that employer-based insurance premiums for about 160 million people would be slightly lower.
Premiums for 14 million individually insured persons would be about 10 percent higher, but coverage would be better, and most purchasing such coverage would receive a subsidy to defray the cost of premiums.
There would be 28 million fewer uninsured persons, with 23 million persons buying their own policies in newly created insurance exchanges and 14 million being covered by Medicaid in 2016.
At face value, this seems like a net-net win for healthcare and those who want health insurance, regardless of whether the Public Option is passed or not.
But look a little closer and you'll see another interesting trend emerging: Individual health insurance will out-pace employer-based insurance coverage if the bill is passed as is.
The incentive for people to go out on the open market and buy their own coverage is clearly built into the legislation.
Sure, employer coverage may be cheaper at the end of these reforms, but when you throw in a subsidy and better coverage, as is provided by the bill, the choice is clear.
More people will favor their own policy that isn't tied to their workplace.
The up-side for business owners is they won't have to buy group coverage.
Insurance companies themselves won't have to make painful cuts (like Aetna's recent decision) to make a profit for shareholders.
Best of all, consumer choice, affordable health insurance and private enterprise will once again cease to become "dirty words" in the debate over healthcare reform.
S.
job market, but the sky has apparently stopped falling.
This news, according to the Labor Department's latest data, is bittersweet for hundreds of thousands of Americans who are still without full-time employment and running out of options for health coverage when COBRA subsidies run out.
Wall Street was bracing for a loss of 130,000 jobs in November.
But only a tenth as many were shed - the best employment outlook since the recession statistically began in November, 2007.
The raw numbers seem to provide solid evidence of economic recovery.
But as we peer into the rearview mirror, economists warn that the worst may be behind us but there will be more bad news to come; specifically when it comes to group health coverage.
Aetna, one of the nation's largest group health insurance providers with 17 million covered individuals, announced recently that it will force some 600,000 from its group/employer client group through sharp premium increases in favor of bigger profits for its shareholders in 2010.
This after the company eliminated about 1,600 positions from its employee rolls earlier this year to cut costs.
"The pricing we put in place for 2009 turned out to not really be what we needed to achieve the results and margins that we had historically been delivering," said Aetna chairman and CEO Ron Williams.
"We view 2010 as a repositioning year, a year that does not fully reflect the earnings potential of our business.
Our pricing actions should have a noticeable effect beginning in the first quarter of 2010, with additional financial impact realized during the remaining three quarters of the year.
" Not surprisingly, Williams' straight-forward admission that Aetna is in the business to make a profit and a profit it shall make is generating criticism among those in the private sector and those members of Congress who favor a Public Option as part of the controversial healthcare reform package; especially given the latest projections about the plan.
Consider this:If the Senate bill becomes law, the Government Accounting Office (GAO) projects that employer-based insurance premiums for about 160 million people would be slightly lower.
Premiums for 14 million individually insured persons would be about 10 percent higher, but coverage would be better, and most purchasing such coverage would receive a subsidy to defray the cost of premiums.
There would be 28 million fewer uninsured persons, with 23 million persons buying their own policies in newly created insurance exchanges and 14 million being covered by Medicaid in 2016.
At face value, this seems like a net-net win for healthcare and those who want health insurance, regardless of whether the Public Option is passed or not.
But look a little closer and you'll see another interesting trend emerging: Individual health insurance will out-pace employer-based insurance coverage if the bill is passed as is.
The incentive for people to go out on the open market and buy their own coverage is clearly built into the legislation.
Sure, employer coverage may be cheaper at the end of these reforms, but when you throw in a subsidy and better coverage, as is provided by the bill, the choice is clear.
More people will favor their own policy that isn't tied to their workplace.
The up-side for business owners is they won't have to buy group coverage.
Insurance companies themselves won't have to make painful cuts (like Aetna's recent decision) to make a profit for shareholders.
Best of all, consumer choice, affordable health insurance and private enterprise will once again cease to become "dirty words" in the debate over healthcare reform.
