Nearly 50 million employees will quit their jobs this year to find an employee who pays more More opportunities for advancement It fits their lifestyle better. Soon they are likely to ask their employer to let them choose their own company health insurance plan. They don’t want their job to dictate their life. And a big part of that is the type of insurance they get and how much it costs them each month.
For the 50% who rarely use insurance, the expensive platinum plan isn’t an advantage. But they need insurance, so they take everything that is offered at any cost. To them, it feels like taxes without representation, and I’m sure we fought a war to put an end to that 250 years ago. However, 160 million people still get their health insurance from their employer without having a say in what they get.
Why such a big deal? In addition to the belief that personal control of the health insurance plan and the cost of premiums is better than no control, there are some major problems with the current system.
Over the past six decades, tax laws have made group insurance the only competitive market for companies. Leaving the entire individual market during this time led to group insurance companies starting to compete for business by paying middlemen big bonuses and very high commissions for doing business with them. Brokers who advise companies have become hostage to a compensation model that incentivizes to maintain the status quo, which means higher costs and limited options. The individual market did not need to compete for business in this way, so commissions are generally very low or non-existent.
Two years ago, tax laws finally changed – giving individual market plans the same status as corporate tax benefits as group health insurance. The individual market is already cheaper than the mass market in more than half the country, and it is getting better every year. Now the only things standing in the way of employees who have a full agency on their insurance plan are Brokers who are motivated to keep their customers in the group market. Abandoning their current model means risking their jobs and the ability to put food on their table.
Under these new tax laws, employers can simply give employees money that would have been used in a group plan to purchase an individual policy that employees choose themselves. Both employer and employee money will be tax deductible. Employees will be able to access a variety of plans from high cost and high coverage with a wide network to low cost low coverage plans with a smaller network. In addition to being able to control their coverage and monthly costs, they also own the plan. So if they leave the company for any reason, they can take the plan with them to their next job. It is fully portable. No more changing networks and resetting discounts.
This opens up a whole world of possibilities. Picture this scenario: Employers offer $600 on a $800 group insurance policy, leaving employees in limbo for another $200. Employees have one option, and they are legally required to have insurance, so they take it. Instead, imagine this: Employers give employees $600 and let them choose their own plan. An employee finds a plan for $450 that contains his doctor and a preferred hospital in the network.
They use that extra $150 for volunteer products, telehealth, health programs, mental health assistance, or even paying off student loan debt. These are all things they could invest in at the moment if employers gave them the option. With this choice, employees went from spending $200 per month out of their own pockets for a plan they might never use to securing a proper plan and additional benefits without spending any money out of their own pockets.
The good news is that word is starting to spread. Once critical mass is reached, the demand for personal choice of health insurance will rapidly grow to become global. Like telecommuting, once employees get wind of their ability to use their employer’s pre-tax dollars to buy whatever insurance plan they want, there’s no going back. Employers who want to attract talent in this new world will need to offer an individual choice of health insurance in the same way they need now to offer telecommuting. The brokers who show them how to do this stand first in winning a lot of business. Any such new business would quickly erase the loss of revenue from the carrier group’s bonuses.
Employees who have the ability to choose their own plan will also have positive positive effects on the whole health care system. Choosing their own health insurance will not only give them access to more plans and control over monthly costs, but it will also revitalize market forces that have long been absent from our health insurance system. Under this new model, insurance will get better, not worse as it was 60 years ago.
I advise you to stop participating in this broken system. Employers are desperately looking for ways to make their employees happy enough to keep them year after year. Most employers do not know that this is possible because their broker did not offer them this option. Employees deserve the right to choose their own health insurance plan. This is the only way forward. No matter what role you play in this system, you will benefit from this new paradigm.