Employers Should Stop Offering Group Health Insurance
Group Health Insurance
The Wall Street Journal on Monday profiled Paul ZanePilzer, an economist and entrepreneur who has recommended thatemployers "stop providing group health insurance and help employees getindividual policies instead." Pilzer recommends an alternative methodof health insurance based on a "tax wrinkle" that allows employers toestablish health reimbursement arrangements, the Journalreports. HRAs are similar to health savings accounts, but the "keydifference is that employees can use the money in an HRA, but generallynot an HSA, to buy health insurance," according to the Journal.For employers with "generally healthy employees, an HRA plan, ineffect, allows the owner to cover a good chunk of most people'sinsurance bills at a fraction of the cost of a traditional groupinsurance plan," the Journal reports.
Pilzer in March 2006 established Zane Benefits,a company that administers HRA-based health plans for small businesses.Zane to date has enrolled more than 300 employers with about 3,000employees, and the company has attracted the attention of UnitedHealth Group,which has encouraged independent agents to take a course offered byZane on how to market individual health insurance to employers thatoffer HRAs.
Pilzersaid, in contrast with group coverage, employees who purchaseindividual health insurance can retain their coverage when they lose orchange jobs and can select their levels of coverage based on theirmedical needs. "I feel I'm doing God's work switching people from groupplans to individual insurance," Pilzer said.
However, critics of the recommendations proposed by Pilzer maintainthat many employees who have pre-existing medical conditions cannotpurchase individual health insurance. "It's poor public policy," GregMatis, counsel for Utah-based health insurer SelectHealth,said. He added, "Here, it will only be healthy people who getindividual policies, and the ones who need coverage the most -- thehighest-risk people -- will be left holding the bag."
Pilzersaid he believes that employees with pre-existing medical conditionscan receive help through state-based programs or other sources.According to some critics, the recommendations violate federal andstate laws that require employers to offer equal health insurance toall employees.
Insurance regulators in Texas have advisedemployers in the state not to follow the recommendations. Mila Kofman,an associate professor at the Georgetown University Health Policy Institute and a former official at the Department of Labor,said, "I think this is blatantly illegal," adding, "I would not adviseany employer to do this." Pilzer denied that his recommendations areillegal. DOL "is aware of the controversy and is consulting with otherparts of the federal government over possible clarification of therules," according to the Journal (Terhune, Wall Street Journal, 7/30).
Reprinted with permission fromkaisernetwork.org.You can view the entire KaiserDaily Health Policy Report, search the archives, andsign up for email delivery at kaisernetwork.org/email. The Kaiser Daily Health Policy Report is published forkaisernetwork.org,a free service of The Henry J. Kaiser Family Foundation.