Should large employer groups get offered better health plans?
With the Affordable Care Act (ACA) mandating guarantee issue health insurance for individuals, just like small and large group health plans, has the era of large group employer based health insurance run its course? After all Americans have access to quality affordable health insurance through the state based health insurance exchanges and open market in 2014 the next battle will be to bring parity between individual, small and large group health insurance plans.
ACA plans = small group plan benefits
Under the ACA individual and family plans (IFP) must be similar in design to the small group plans offered within the particular state. In other words, individuals and families will have access to health plans that are as “good” or “better” than the plans offered through small employer groups. In reality, the membership pool for some of the state based IFP plans may be bigger than some large employer groups that have even better benefits at lower premiums.
Carriers want group health insurance
Insurance companies actively bid to acquire large employer group business from governments, unions and large corporations. Special state and federal laws are crafted to give some of these large employers an advantage in obtaining their health plans. A quick review of the California Pension and Retirement System (CalPERS) health plans show how different the large employer groups can be from the IFP and even small group plans.
CalPERS large group health insurance
CalPERS rates and benefits are different from either small groups plans or the new Covered California health plans.
- CalPERS California is one single region. Covered California has 19 different pricing regions. Most small group plans also have multiple pricing regions depending on the carrier.
- CalPERS does not adjust rates for age. This hurts younger employees but is a boon to older employees.
- CalPERS maximum rate column is “Employee plus two dependents”. Covered California will rate up to three children under 18 years old and each adult dependent, 19 – 26 years old, will also incur additional premium. Most small group’s maximum rate is based on two adults and a child. This will change in 2014 as many small groups will also include rating columns based on household size, much like Covered California.
- CalPERS plans can also include extra coverage for acupuncture and chiropractic which is not included in Covered California health plans or many small group plans. Some small group plans allow an employer to add specialty benefits like acupuncture for an extra cost.
| CalPERS 2013 Health Premiums – State Only | |||
| Employee Only | Employee & Dependent | Employee & 2 Dependents + | |
| Kaiser | $609.34 | $1,218.68 | $1,584.28 |
Full download of all rates at end of post.
Equivalent Kaiser small group plan offered in Sacramento County.
| Kaiser $15 Copay Sacramento Rates Jan. 1 – June 1, 2013, RAF 1.1 | ||||
| Age | Employee Only | Employee + Spouse | EO + S + 1 Child | EO + S + 2 C |
| 40 – 49 | $561 | $1,291 | $1,066 | $1,704 |
| 50 – 54 | $730 | $1,517 | $1,204 | $1,939 |
| 60 – 64 | $1,138 | $2,162 | $1,522 | $2,524 |
Covered California Kaiser Platinum, Sacramento County
| Covered California Kaiser Platinum Zip Code 95608 | |||||
| Age* | Single | Two Adults | Adults + Child | Adults + 2 Children | Adults + 3 Children |
| 40 | $458 | $916 | $1,143 | $1,370 | $1,598 |
| 50 | $640 | $1,279 | $1,507 | $1,734 | $1,962 |
| 60 | $972 | $1,944 | $2,172 | $2,399 | $2,627 |
| Children < 18 years old | |||||
*Both adults are calculated at same age.
– No adjustment has been made for employer contribution or potential premium assistance under Covered California.
Similar copays, but not maximum out of pocket amounts
The most striking difference between the Kaiser plans offer through CalPERS, Covered California, and the $15 Copay small group plan is the family maximum out of pocket amount. The only expenses CalPERS Kaiser members have to worry about in the event of a large accident or major illness are the copayments. Both Covered California and the Kaiser small group plan expose the members to coinsurance from $5,000 to $8,000 per year.
| CalPERS Kaiser | Kaiser Small Group $15 Copay Plan | Platinum Kaiser | |
| Deductible | $0 | $0 | $0 |
| Primary Care Visit | $15 | $15 | $20 |
| Specialty Care Visit | $15 | $15 | $40 |
| X-Rays | $0 | $10 | $40 |
| Imaging (MRI, CT) | $0 | $50 | $150 |
| Urgent Care | $15 | $100 | $40 |
| ER | $50 | $100 | $150 |
| Outpatient Surgery | $15 | $100 | $250 |
| Hospitalization |
$0 |
200/ day | $250/day 5 day maximum |
| Generic Drug | $5 | $10 | $5 |
| Brand Drug | $20 | $25 | $15 |
| Family Maximum Out of Pocket | copayments | $5,000 | $8,000 |
– Summary of benefits of the most recent plan offerings in 2013 available.
Are individuals in large group plans special?
The Kaiser CalPERS plan is not the only one offered to state employees. Equally benefit rich plans are also offered by Blue Shield of California. Why should health insurance benefits be so drastically different based on an employer plan? Illness and accidents don’t discriminate based on employment or union membership. Neither should the total cost to a family for quality health care be based on the employer plan offered. Perhaps this is the beginning of the end for employer based health plans. With the way employers complain about the rising cost of health insurance it might be time to ditch the group health insurance and just give the employees a raise and let them buy insurance on the open market.
Group health insurance is evolving
Covered California is working on rolling out their Small Business Health Option Program (SHOP), but they are hobbled by the extra ordinary amount of rules and regulations governing small group plans. I’ll look at a comparison of SHOP plans and some of the challenges to the program in my next post.
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