Portability – Part III

by admin on 06/20/2011 1:02 AM

Creating Personal and Portable Health Insurance. Just because employers pay all or most of the premium does not mean that health insurance must necessarily be employer-specific. As an alternative, why can’t employees enroll in health plans that meet their needs and stay in those plans as they travel from job to job? Personal and portable health insurance would solve many of these problems.

Employers should be able to buy personal and portable insurance for their employees. Even though employers initially would pay the premiums (as they do today), this insurance would be owned by the employees and would travel with them as they move through the labor market. Thus employees would get portable insurance (a characteristic of individual insurance), but they would get it at premiums that are closer to the norms of group insurance.

Although it is envisioned that employers initially will buy all their employees into the same health plan, with the passage of time some of those employees will leave and go to work for other firms. Employers will also hire new employees who are members of other plans. And, in most cases, the employer’s initial group of employees will be able to switch to other plans after a transition period. The typical employer, therefore, can eventually expect to have employees in different plans. Indeed, it is possible that every employee will be in a different plan.

Advantages of Portable Insurance. Portable health insurance promises a continuing relationship with an insurer and, therefore, a continuing relationship with doctors and health facilities. It also means that people can find a health plan they like and stay in it, without worrying whether they will be forced out of the plan by an employer’s decision or by a change in employment.
For employers, portable health insurance means that small groups are no longer treated as a self-contained pool and rated each year based on changes in health status of their employees. Instead, their employees will be members of very large pools in which no one can be singled out because of a sudden large medical expense, and premium increases are the same for all. Under this system, employees can be in a plan of their own choosing and employers can limit their contribution to a fixed dollar amount. New hires will know how much the employer is going to contribute to health insurance, just as they know the amount of their salary. Because the employer’s role is largely financial, in a real sense employers will get out of the “business” of health insurance.

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