Health care savings for districts and teachers?
According to author Paul Zane Pillzer in an interview with Newsweek, many companies are dropping employer sponsored health plans and instead providing money for employees to pay for their own -- at far less cost. How does it work? For those without pre-existing conditions, the cost of individual plans, on average, is half the cost of employer plans. And for those with pre-existing conditions, well, I'll let Pillzer explain:
Pillzer: The average [healthcare] expenditures for an American are $6,600 a year. Ninety percent of the people spend less than $1,000, but 10 percent use more than $40,000 a year. In the old days, we didn’t know who was healthy or not. The thinking was that anyone could get cancer or other diseases, so let’s bond together and insure each other. But crank the clock forward 20 years and I can predict with 99-percent accuracy what you will spend next year. And a carrier can check with the Medical Information Bureau, which has your whole file. So if you’re healthy, the [insurance company] would charge you $7,000 for what they charge the company $14,000 because under their policy with your company, they have to cover whoever is in the company. But if they could choose to only cover the 90 percent, they would charge them less.
Newsweek: What happens to the other 10 percent?
Pillzer: Two big things have happened that exploded the popularity of individual health insurance policies. One is that companies are allowed to pay for individual policies now and can reimburse employees tax free. And, starting in 2005, states are now required [by Congress] to have state guaranteed coverage.
Newsweek: For that 10 percent with health problems?
Pillzner: Yes, we’ve always had it for old people with Medicare, and for poor people with Medicaid … But this is not for poor people but middle class and upper class people who have been rejected for an individual policy or have had their policy rate [premium] upgraded because of a health problem—or they have a letter saying one of those two things would happen if they applied. That makes them eligible for state guaranteed coverage.
Newsweek: Won’t it be much more expensive?
Pillzner: It is the identical coverage but two to three times the [average premium price] in the state. Some states are better and some are worse ... But healthy family members could get individual coverage then get the unhealthy person guaranteed coverage. So you can lock in a lower rate for the other family members who are healthy.
And the overall cost would still be less. I could see a scenario where districts take the money they currently spend on health insurance, give it to teachers directly (non-taxable as a health care stipend) and teachers shop around for the best price. The districts would save money on administrative costs and teachers would have a net gain. Those with pre-existing conditions wouldn't gain anything, but, at least it would seem from what Pillzner is suggesting, they wouldn't lose anything easier.
This change in how health insurance works will be fascinating to watch. In a world where the average employee switches jobs an average of eight to ten times in their life, it no longer makes sense for health insurance to be tied to one's job. The savings for districts and teachers here could be immense.