The National Federation of Independent Business caused shockwaves this week with an extensive poll that showed 57% of small businesses were either very or somewhat likely to drop coverage after the health law takes effect. The survey also showed that, since the law passed, 12% of small employers said their health plan has been, or soon will be, terminated.
But the real blockbuster finding … is that 55% of them say it is “not too likely” (18%) or “not at all likely” (37%!) that their business will have an employee health insurance plan a year from now!
This is shocking, indeed. But there is a very positive and optimistic alternative. The survey also found that 57% of small businesses would continue to participate in health coverage if they had a different option — one that involves giving employees a “tax-excluded contribution” they could use to purchase health insurance in an “open market.”
This is the defined contribution model that we believe is the future of 21st century health benefits after ObamaCare falls. A defined contribution (which works like a 401k) would give employees more control over their choices of health insurance coverage, give them ownership so the policy is portable and not dependent upon their job, and provide a greater incentive to shop for the best value — thereby forcing the health insurance marketplace to provide better benefits at better prices.
My question is: Will there be an “open market”? There is not one now, and if politically-controlled exchanges destroy the individual (direct-purchase) insurance market. On a related note, John Graham writes:
[T]here may be ways for employers to make legal contributions to Flexible Savings Arrangements (FSAs) or Health Reimbursement Arrangements (HSAs) without providing group health benefits. This frees up employees’ own income to buy individual health insurance. This appears to be the business model of Bloom Health (which refers to itself as a “private exchange,” but I view that as simply a promotional term in sync with the times), LyfeBank, and certain individual brokers and advisers. However, some industry experts of my acquaintance suggest that these folks are not quite be “coloring within the lines” and might face regulatory retaliation. Furthermore, this platform appears not to have achieved significant market share.
Read this whole post: Why Don’t Health Insurance Exchanges Work?
