If you're like me, you've pondered moving to high-deductible plans at some point in the last five years. Whether you made the move or not, this much is certain: Companies that started with a traditional PPO plan have generally kept those plans in place, bringing in the high-deductible/consumer-driven plans as an option, then attempted to draw employees into those plans with premium cuts and funding of health-care accounts (HCAs).
Not GE. They went nuclear. More from BusinessWeek:
"It's been a hard year to work at General Electric (GE). Salary freezes have hit its famously performance-driven employees, with some managers taking pay cuts. And now GE is making changes that could deal another blow to morale. The company is forcing its 75,000 salaried U.S. employees and 8,000 retirees under the age of 65 to choose what's known as a consumer-directed health plan, which includes deductibles that run as high as $4,000 a year. Traditional plans, where employees pay higher premiums in exchange for predictable co-pays up front, are no longer available for salaried workers. One employee says his colleagues "are looking at this as a cut in pay."
That's what's called a BOLD move people. Like so much else in today's world, it all comes down to money:
"GE says the plan is being rolled out to make employees better health-care consumers and to coincide with its new "Healthymagination" strategy, a companywide initiative for health-care innovation. While GE says its future cost savings are unclear, people with knowledge of the situation estimate it could save $1 billion over the next decade or so. With three tiers of premiums and deductibles, GE spokesperson Sue Bishop notes, employees still have options. "It's not that different from their car insurance," she says. "You get to choose the amount of your premium, and that determines the amount of your deductible."
Moving from PPO to high-deductible only. That's the nuclear option. Will the bold move by GE spawn a bunch of similar "me-too" moves? I suspect only after the move looks to be on track to save 1 billion with limited downside in terms of retention, etc.
I agree that what GE has done here is pretty bleeding edge, but I don't see this as "the nuclear option." I think we'll see the nuclear option play out after health reform legislation is enacted in the form of some large employer's complete elimination of health benefits altogether. The legislation currently being debated is likely to substantially increase costs to employers and make benefits administration onerous, and the penalties for not providing coverage are so insubstantial that many employers will decide to get out of the business of providing health benefits altogether and simply pay the applicable fees.
I suspect it'll be a large retailer who moves first on this, given the number of low wage employees they require to run their businesses. Though I’m sure they would love to move first on this, it won’t be Wal-Mart due to the public relations mess it would create for them. Keep your eye on other bargain focused retailers (K-Mart, Target, Costco, etc.) and/or grocery chains, though.
The cost increases that will likely result from the proposed legislation will ultimately lead to a simple business decision: continue to cover the rising cost of health insurance for employees without much opportunity to help curb those costs or pay a nominal fee so that they can purchase insurance elsewhere. It doesn’t take an MBA to come to a logical conclusion.
Posted by: Greg Dagley | December 08, 2009 at 10:05 AM
Hello - this is not a new thing! Welcome to the real world that many of us are already in, and have been for several years. Try a family deductible of $5K - and then a 10% copay afterwards. Yeah, it's equivelant to a paycut, however there isn't much in the way of options except moving to another company, and even then they don't tell you up-front, but after you start the job... The irony is that although it saves the company money upfront, how many people will post-pone check-ups, and preventative care due to the high out-of-pocket costs. Then they discover something major, which costs more money to treat, for everyone, rather than the lower preventive costs, which might have stopped or limited the more costly outcomes? (i.e. Diabetes, High Blood Pressure, Cancer, etc.)
Sure HSA accounts are a nice concept, but you have to have money to put into the account, upfront! How many families, have an extra $5K sitting around to put into the account, to cover their deductible costs - not many...
Posted by: DSWilson | December 22, 2009 at 10:46 AM
As the director of EAP for a behavioral managed care organization, I have experienced first hand over the past twenty years that most Americans are not prepared or equipped to navigate the health care arena, which can be confusing and intimidating. For cost savings, as well as better outcomes, barriers to appropriate care, including financial, lack of knowledge, and apathy, must be removed. Controlling health care cost and producing better outcomes requires lots of education and guidance. I think high deductible plans have shown that health care is simply under utilized, resulting in higher long-term cost due to illnesses being identified in later stagies.
An effective EAP can provide the education and assistance to enable the consumer to make good decisions. A PPO allows freedom of choice and negotiated rates. Organizations can further enhance their benefits and contain cost by integrating an EAP and behavioral managed care carve out, all on a fee-for-service, or pay for services rendered basis.
Posted by: Judi Braswell | January 05, 2010 at 10:27 AM