The employer-sponsored health care system provides health insurance to more than 60 million people–but it does not exist in a vacuum. Employers are often reminded of this fact when their health care costs go up each year. Factored into that cost increase are premiums employers pay to hospitals to help those institutions provide care to the uninsured.
Two years ago the actuarial firm Milliman put a price tag on this cost-shifting: employers pay an additional $1,115 more for a family of four’s health insurance to make up for this loss. That totals about $88 billion annually.
This cost-shifting is once again becoming an issue as the federal government looks to provide insurance to people who cannot otherwise get it because they are considered high-risk.
States have for years created high-risk pools to separate the people with especially high health care costs from the rest of the population. Normally these folks can’t get insurance. The high risk pool absorbs some of the cost to insurers.
Now the federal government is getting in on the action, in large part to address the issue that insurers regularly refuse to issue insurance to some people or they do so at rates that are prohibitively high.
A new analysis on so-called high risk insurance pools that the federal government will set up as soon as July as a result of health reform makes the point that the money allotted will run out much sooner than originally thought. Instead of covering as many as 7 million people who could qualify there will likely be enough money to cover about 200,000 annually. This is not surprising. The need is always greater; the funds always inadequate.
So what does this all mean for employers?
It appears one step removed. But, as employers know, the health care system is fragmented yet, in the end, someone – either the federal government or employers – ends up paying the cost. In the analysis, published by the Center for Studying Health System Change, the authors point out that states with high risk pools currently do not assess self-insured employer plans.
Under the federal law this will change. Employers will face an assessment. One possibility is that the assessment will have to go up in order to increase the amount of money in the pot. The other of course is to limit who can get access to the high risk pools.
It remains to be seen what kind of conflict this issue will provoke. Like many other aspects of the new health care reform, it has the potential to fade away or to metastasize into something problematic.
But one thing remains likely: costs will continue to go up. The question is who will pay for these costs? If these assessments are any sign, it will be insurers and self-insured employers.