Our current health insurance paradigm has been in place for so long that many of us know nothing else. But believe it or not, the unthinkable might be inevitable. There are some early signs suggesting that the employer-sponsored group health insurance plan could be on its way out. Its demise isn’t imminent, but it may be extinct a few decades from now.
That sounds too hard to believe, right? After all, our health insurance system seems to work. Private health insurance takes care of the working population while a combination of Medicare and private insurance takes care of retirees.
Stamford Advocate contributor Justin Brock recently wrote a compelling piece detailing why he thinks the individual health insurance market is doing so well right now. The piece is not actually about the demise of group health insurance, but he makes a couple of poignant statements pointing in that direction.
ACA Insurance Marketplaces
HMOs have taken a public relations beating since the Affordable Care Act (ACA) was implemented in 2012. Much of the trouble is related to marketplace health insurance plans often being cheaper. Many employees just don’t know it.
Every year that brings a rate increase (are there any that don’t?) forces more companies to consider dropping their plans and pointing employees to government marketplaces instead. And of course, employees are still free to shop on the marketplaces if they cannot afford what their employers offer.
Insurance brokers attempting to keep employers in the insurance marketplace are continually having to work with general agencies and carriers to find more affordable options. It is not getting easier, according to Dallas-based general agency BenefitMall.
Reducing Medicare Eligibility Age
Shifting younger employees to marketplace health insurance policies addresses one end of the spectrum. Addressing the other end requires giving seniors more affordable options. One possibility is reducing the eligibility age for Medicare. According to Brock, it looks very possible that it could be dropped by five years to sixty.
The baby boomer peak is supposed to occur sometime around 2024 or 2025. Between now and then, healthcare costs are expected to rise dramatically. Seniors will end up paying even more for their supplemental insurance at a time when they can least afford to. Better Medicare looks inviting, doesn’t it?
Combining the Two
A shift to marketplace insurance and lowering the Medicare eligibility age is a combination that addresses both ends of the spectrum. That leaves older millennials and workers in the Gen X category. They seem to be the holdouts for traditional employer-sponsored group health insurance.
The fortunate thing for people who believe in Medicare for all is that everyone ages. Let’s assume Medicare eligibility is reduced from 65 to 60. Some of those early Gen Xers will be eligible for Medicare within the next 5 to 10 years. Two decades from now, nearly all of them will be retired and on Medicare anyway.
A Public-Private Hybrid
If Brock’s prognostications prove correct, we could end up with a public-private hybrid that would see the government act as a single-payer with private insurance companies handling the actual administration. Whether or not that model would ultimately end up being less expensive is a matter of debate. But that seems to be the way we are headed.
The days of employer-sponsored group health insurance may be waning. As more people figure out that they can get their insurance cheaper on government marketplaces, there is less demand for employer plans. Likewise, it appears as though the government wants to get as many people on Medicare as possible. That is the perfect combination for eliminating group health insurance.