Firms Cut Choices in Health Care Plans: Most Employees Face Take-It-or-Leave It Decision

By Goldreich, Samuel | The Washington Times (Washington, DC), November 2, 1998 | Go to article overview

Firms Cut Choices in Health Care Plans: Most Employees Face Take-It-or-Leave It Decision


Goldreich, Samuel, The Washington Times (Washington, DC)


When local federal employees arrive at work next week most will be inundated with brochures, flyers and other literature from health insurers.

More than 20 plans will pitch coverage to the army of bureaucrats, who make up about half of the region's employment base. But most private sector workers are not so lucky.

Despite business group insistence that the free market offers the best choice of health insurance, that luxury doesn't exist for more than half of people nationwide who depend on private employer-sponsored health insurance. Most companies that have dropped traditional fee-for-service health insurance that lets people choose doctors without restriction do not provide employees with managed-care options.

The same situation exists in the Baltimore-Washington region, where a recent survey shows that fewer than one in five private employers provide their employees alternatives.

For most workers, that means they have the choice of a take-it-or-leave it health plan.

Waveworks, a video and audio post-production firm based in Arlington, is typical of the 96 percent of small local businesses that offer only one choice.

"It's a growing expense on the cost of personnel," that the company can't control if it offers more options, said Waveworks President Jim Harmon.

Waveworks provides its 35 employees coverage under a preferred provider plan, or PPO, run by Virginia's Trigon, a for-profit Blue Cross licensee. PPOs - a hybrid of a health maintenance organization, or HMO, and traditional insurance - charge members a higher co-payment or deductible if they go outside the network for treatment.

ONE-PLAN OPTION

The District, Maryland, Virginia and nine other states require health insurance companies to offer employers a choice of coverage options.

If a company wants to market a HMO, which requires patients to choose health-care providers from within a network, in this region it also must make available a point-of-service plan. These so-called POS plans allow members to choose doctors and hospitals from outside an HMO network in return for lower levels of coverage or higher premiums.

But no local government requires that employers pass along that option to employees.

The result is that only 16 percent of companies of all size in the Baltimore-Washington region offered workers more than one health plan last year, according to Rand, a think tank, which conducted a survey of 21,000 employers nationwide for the Robert Wood Johnson Foundation.

The picture is only slightly better nationwide, where only 17 percent of all employers provide a choice and 59 percent of all workers have no alternatives but to accept their company-sponsored plan.

But even a single-option plan creates administrative and cost headaches for employers, especially small businesses like Waveworks, which expects revenues to approach $5 million this year, Mr. Harmon said.

"Every couple of years a small business has to go out and do an analysis and re-evaluation of its health insurance," he said. "The insurance companies get you on a sort of bait-and-switch basis. For a year or two the rates are good. Then, all of a sudden, you face a 30 percent rate increase."

Small employers don't have the buying power to negotiate, said Rand's Susan Marquis.

"There are so many small employers in the area and it's difficult for them to offer a choice unless they're part of some sort of pooled arrangement," she said.

The lack of choices has undermined the theory that "managed competition" between health plans can improve health quality and prices, Rand reported.

But Paul Fronstin, an analyst with the Employee Benefits Research Institute, said competition has grown as health plans have tried to undercut each other's premiums.

"Health plans have been competing for years and that's why prices have been so low," he said. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Firms Cut Choices in Health Care Plans: Most Employees Face Take-It-or-Leave It Decision
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.