In an effort to control rising health insurance costs, more and more companies are handing the responsibility of choosing a health insurance plan to their employees – and limiting employer contributions.
Kaiser Health News, in conjunction with USA Today, reports many businesses are sending employees to a “private exchange” or marketplace where they compare and choose their own insurance. They’re also capping the amount the company will pay toward coverage, essentially providing employees with an allowance used for health insurance.
On one hand, this gives workers a wider choice of plans, rather than the one or two currently offered by many employers. On the other, health care costs will be passed onto employees instead of onto their employers. NovaRest founder Donna Novak says companies as large as GM are suffering every year from raising health care costs that erode profits. Now these costs will be passed onto employees. “The bottom line, employees will have more choices, but they will pay more and that cost will increase every year at a rate higher than any salary increase that they can expect,” said Novak.
Novak says Medicare recipients will see similar changes. “This is the future of Medicare under a voucher system. Just like employers, Medicare administrators are looking for ways to reduce the impact of raising health care costs,” she said.