Magazine article Risk Management

A Perspective on Health Care and the Employer

Magazine article Risk Management

A Perspective on Health Care and the Employer

Article excerpt

In recent years, there has been much debate over "socialized medicine," FASB 106 and the treatment of the cost impact of retiree medical benefits, along with long-term care, medical care cost containment and other health care issues. These collectively point to the mishmash of activity which sadly serves as the American way to cope with the great exposure our society faces with the array of injury and disease that threatens each of us every day.

It seems ironic that risk managers, who have more practical experience than most people about the costs and mechanics of various components of our medical care system, do not have a higher level of knowledge, concern and curiosity about who is paying the total bill, and how to critique and improve the system without getting trapped in the old methods of thinking which brought us to where we are today. Perhaps this is because too few risk managers have experience with employee benefits.

In my view, cost containment and long-term care are not innovative, effective management devices. Instead, they represent a "band-aid" approach, which at best, can only temporarily outwit a clumsy, but powerful, adversary. The inertia of the American medical establishment doesn't slow down for long; it adjusts to and overcomes the obstacles of piecemeal resistance. Temporary cost-shifting and whiz-bang accounting methods do not change the fact that effective medical care is becoming increasingly costly and unattainable for Americans. America's corporations may be directly footing too much of the bill, thereby adding to the fundamental problems of the system.

Since FASB 106 appears to insist that there is a difference between future unpromised but intended medical costs for retirees, and those for active employees, it is a good time for employers to take a look at all medical costs wholly or partially paid by them. Here is a list:

* Group medical benefits for active employees and their dependents.

--promised (collective bargaining).

--intended, but not promised (salaried).

* Group medical benefits for retired employees and their dependents.

--promised, bargained for.

--intended, not promised.

* Special executive medical coverages.

* Workers' compensation medical benefits.

* Medical portion of automobile and general liability claims.

* Related catastrophe or "stop loss" insurance premiums.

* Medicare premiums (including subsidy plans for older employees and/or retiree premiums).

* Direct and indirect costs of managing, administering and accounting for all of the above.

* Medical part of federal and state taxes:

--Medicaid and welfare medical assistance/clinics.

--Public (non-profit) hospital assistance and contributions.

--Medical benefits for government employees and their dependents--city, country, state and federal.

--Veterans' Administration hospital/medical system.

--U.S. military hospital medical system.

Employees may also want to look at their individual contribution to the aforementioned items and consider the premiums which they and others pay for individual private medical insurance policies, such as COBRA coverage, group conversion plans, and personal outlays for coinsurance, deductibles and medical care not covered.

One day, both employers and employees are going to realize they have jointly become the unwitting victims of a semi-conscious conspiracy between government, insurers and the medical care establishment which has sold us on the idea that private employers should pay for most medical benefits and the rest should be picked up by employees, the idle rich and government. …

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