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Don't Worry, Be Happy...

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Workers continue to perceive their health insurance as more valuable than it may really be.

The National Business Group on Health, founded over 30 years ago, represents some 200 large employers, focusing on health care and health insurance issues. They recently conducted a survey of over 1,600 employees of large U.S. companies, and found that, even with rising costs, most workers are very satisfied with their " employer-provided" health care benefits.

Indeed, most consider their health plan to be their most important benefit, and aren't interested in buying coverage on their own. About three-quarters value their health coverage as their "most important" benefit, and about two-thirds rate their plan as "excellent" or "very good." They also appreciate ease of use, freedom of choice (as regards providers), and lower caps on out of pocket costs.

Of course.

This dovetails nicely with another key finding: employees are reluctant "to make trade-offs or changes to other aspects of total compensation if it would affect their health coverage."

Reality is such a bummer:

First, it's important to realize that employers don't actually pay for health insurance. They simply redirect a portion of their employees' wages directly to the insurance carrier. Since employees never get to see this princely sum, they aren't taxed on it. On the other hand, they are given a choice of, at most, a few different plan designs. There is little (if any) customization, and no way to save money by removing unwanted (or unneeded) benefits. Of course, some of this exists in the individual market, as well, due to government mandates (both state and federal).

Second, there's (at least) one troubling statistic buried in the report: almost two-thirds of employees are reluctant to reduce their health benefits in favor of increased funds for retirement. In fact, more than 8 in 10 would choose to lower their wages or expected retirement income to bolster their health insurance benefits.

So why is that troubling?

It means that folks have a warped perception of how insurance really works, and are willing to give insurers more money (in the form of increased premiums) for coverage that they may never need or use. There's a common misperception that Consumer Driven Health Plans shift risk to the insured, when in fact, the opposite is true. Carriers that don’t offer real value (i.e. substantive premium reductions) for their high deductible plans don’t help that problem, however. Until that happens, it's likely that "average Joe's" will continue to value high-priced plans (which they perceive as benefit-rich) over increased take-home pay and income at the end of their working lives.

Be Well.

UPDATE: There's an interesting little debate about this column going on at Health Care BS.

Henry Stern, LUTCF, CBC is an independent insurance agent in Dayton, OH. A licensed Continuing Education instructor for Ohio and Kentucky, he has well over 20 years of experience in “the biz.” He blogs every day (or so it seems) at InsureBlog.

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from Health Care BS on Sun, 04/15/2007 - 11:49am

InsureBlog links to a post at Trusted.MD on the entirely unsurprising fact that most employees are satisfied with their employer-based health insurance. The post contains the following rather trite observation:

Employers don’t actually pay for h...

from InsureBlog on Sun, 04/15/2007 - 7:43am

In this week's 'Dispatch, we learn that many workers continue to perceive their health insurance as more valuable than it may really be.

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