Should companies continue to provide health insurance to their
employees?
Most people are fortunate enough to have health insurance coverage
through their employment with a particular company.
A typical
family policy cost about $129.00 per month in 1999. By 2007, the
same policy increased by 70% to $273.00 per month.
The increase has mainly been caused by the soaring costs of
premiums. And, with these consistent hikes, it is highly unlikely
that companies will be in a position to continue to pay their
employee's insurance premiums.
Those employees hardest hit are the lower-income workforces. A
typical family policy offered by employers costs roughly $12,100.00
per year. The average share that an employee makes on this
company-offered policy is approximately $3,200.00 per year; for a
family salary of $40,000.00 per year, that's about 8% of their
pre-tax income, not including deductibles or co-payments!
According to a recently released survey, the nation's largest
companies continue to move away from traditional pension plans,
offering new employees defined accounts like 401(k)'s only.
Companies that have made this change require employees to play a
major role in funding their retirement savings.
Other companies have been testing hybrid types of benefit plans
(cash benefit plan), whereby a guaranteed benefit is offered but
long-time employees are generally provided with less in accrued
benefits than the traditional pension program.
In fact, there are differing views on which direction the country
should move:
- Should people buy their own policies, armed with tax deductions
or credits, through the private market?
- Should insurance be purchased, with some oversight by the
Government, through exchanges (regardless of where or if person
works, or has medical condition)?
It is criticized that the current system grants tax breaks to
corporations offering insurance to their employees, whilst enabling
those workers receiving coverage to receive tax-free benefits.
Unfortunately, at the same time, if you are a member of the
low-income workforce not only do you not get insurance through your
job, you are also not entitled to a tax break.
Some of the plans are likely to encourage employers to drop
coverage altogether as they don't want to lose all, or a percentage,
of their "write-off insurance as a business expense" ability.
Perhaps, an alternative could be that employers drop insurance
coverage for their employees but offer them salaries high enough to
compensate for the fact that they need to purchase their own
insurance.
If Exchanges were created, and health insurance was available that
was a combination of affordable coverage, and a
government-subsidized program, then maybe people with medical
conditions would not find it difficult to get insurance coverage;
insurers would not fear that people only wait until the eleventh
hour when they really need the health care coverage to purchase it,
and people need not suffer unnecessarily because they do not feel
they have any insurance options.
Either way, with more companies declining to offer their
employees insurance, problems are sure to increase with the number
of people struggling to get coverage; especially those with existing
health problems.
The employment market is changing; jobs are more flexible, and in
some cases more short-term. New ideas , and major effort needs to be
generated in order to revamp the system. Our working world has been
altered from that of our parents and grandparents.
Federal Legislation is inevitable, though it is not likely to
happen soon; at least not until after the next Presidential election
in November 2008.
"Your" Money Matters, by
Carl Hampton
From the Author of "From
Credit Despair To Credit Millionaire."
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