Why employer-sponsored health insurance could disappear in the next 20 years

[Duaine]

Change is an inevitable part of life; and for the insurance industry, the next 20 years may prove to be a time of intensive and systemic change. The central cause of this shift is the imminent collision between escalating employer-sponsored health insurance premiums and budgetary constraints. Employers may eventually decide that they can no longer afford to provide health insurance benefits to their employees.

The future of health insurance
Looking 20 years ahead, I genuinely can’t imagine that employer-sponsored health insurance will still exist, at least not in its current form. There’s just no way that the existing model of devoting the majority of the benefits budget to health insurance can remain sustainable for employers. It’s already verging on unsustainable; most employers I talk to admit to spending 80% of their benefits budget on health insurance alone.

Moreover, the cost curve continues to spiral upwards with each passing year. Between 2012 and 2022, premiums for family coverage rose by 43%, more than double the rate of inflation for the same period. Current projections suggest that health premiums will increase by more than 6% in 2023, with most carriers expecting even higher annual rate increases in the coming years.

Taking that figure of 6% as a yardstick for estimating future health costs, we can apply the rule of 72 to estimate how long it will take for current health costs to double. So if we take 72 and divide it by the numerical value of the percent increase – in this case, 6 – we get 12, meaning costs will double in 12 years. That means if an employer is currently paying $20,000 for an employee’s health plan, they could be paying $40,000 in 12 years and $80,000 in 24 years.

No employer on earth will ever contribute that much to a health plan. At the very least, employers will bail on sponsored health insurance and switch to the individual coverage health reimbursement arrangement. At the very most, employers will balk entirely, and the federal government will be forced to step in and extend Medicare to all. The latter option would represent the swiftest tactical – if not political – action. And, who knows, it may even end up being a swift political action once the government is faced with what could be a mass exit of employers from the health insurance market.

[EXTERNAL LINK] - Why employer-sponsored health insurance could disappear in the next 20 years

 

[somarco]

Employer retiree health insurance is all but gone except with very large employers, unions and of course government entities.

No reason not to believe EGH won't follow.

ERISA was a fatal blow to the traditional pension plan. Even Fortune 100 companies jettisoned defined benefit plans years ago.

Unions and government entities are the only place where you will still find defined benefit pensions.

 

[StephanieCJ]

Amongst the large companies and government entities, more of those are moving to Medicare Advantage and away from the coverage that they traditionally offered. Ihave had several calls recently because the largest city near me is moving their fire department retirees to a Medicare Advantage plan and the people calling are looking for a supplement. Same with the AT&T AON retirees.

 

[Newby]

They should have separated health insurance from employers long ago. It’s a crazy system. Every individual should have access to buy the same plans as anyone else. It should not matter where you work or even if you work.

 

[somarco]

Mayor Eric Adams’ administration signed a contract with Aetna earlier this year for a Medicare Advantage plan that . the city has said would save $600 million a year on retiree health care costs(Retirees fighting the switch have disputed this figure.) The switch from retirees’ traditional Medicare plans was set to go into effect on Sep. 1, until Manhattan Supreme Court Judge Lyle Frank granted a temporary restraining order in July.

Retirees have fought the switch, arguing that privatized Medicare Advantage plans will limit access to their medical providers, could come with higher out-of-pocket costs, and have been found to deny necessary care. Retirees currently enroll in traditional Medicare, along with a city-subsidized supplemental coverage plan known as Senior Care.

[EXTERNAL LINK] - New York City retirees score major victory in Medicare Advantage fight


the city has said would save $600 million a year on retiree health care costs - translation . . . city shifts the cost of health care from themselves to the retirees . . . .

Anytime a company or government entity says the change will save money what they really mean is they are cost shifting.

We are doing this to SAVE Social Security . . . beneficiary is getting screwed

Trying to save Medicare . . . lobbyists and their partners in crime get rich, insurance carriers get rich . . . beneficiaries bear the cost in increased OOP costs, claim delays and denials

 

[Newby]

Mayor Eric Adams’ administration signed a contract with Aetna earlier this year for a Medicare Advantage plan that . the city has said would save $600 million a year on retiree health care costs(Retirees fighting the switch have disputed this figure.) The switch from retirees’ traditional Medicare plans was set to go into effect on Sep. 1, until Manhattan Supreme Court Judge Lyle Frank granted a temporary restraining order in July.

Retirees have fought the switch, arguing that privatized Medicare Advantage plans will limit access to their medical providers, could come with higher out-of-pocket costs, and have been found to deny necessary care. Retirees currently enroll in traditional Medicare, along with a city-subsidized supplemental coverage plan known as Senior Care.

[EXTERNAL LINK] - New York City retirees score major victory in Medicare Advantage fight


the city has said would save $600 million a year on retiree health care costs - translation . . . city shifts the cost of health care from themselves to the retirees . . . .

Anytime a company or government entity says the change will save money what they really mean is they are cost shifting.

We are doing this to SAVE Social Security . . . beneficiary is getting screwed

Trying to save Medicare . . . lobbyists and their partners in crime get rich, insurance carriers get rich . . . beneficiaries bear the cost in increased OOP costs, claim delays and denials