Innovative New Employer Health Plans
Recently the Wall Street Journal ran a story on how some companies are just giving employees a health insurance allowance (rather than a particular health plan) with which they can buy the plan of their choice in the individual market. Here is an example from the article:
“Helen Griffin, owner of IT Pros in Overland Park, Kan., was fed up with soaring premiums her insurer was demanding. The technology firm this year began offering a $100-a-month HRA [Health Reimbursement Arrangement] allowance, plus an additional $200 a month for workers with a spouse and children.
Ms. Griffin says all five of her full-time employees were able to find individual coverage. She and her husband paid a combined $330 a month for their policies, down from $800 a month paid by the company when the business had a group plan. Businesses with only a handful of employees often pay high group premiums, because insurers must accept all employees and they keep rates high to protect against large claims.”
With guaranteed issue and community rating in Maine’s individual market, such options are not feasible here. However, if Maine’s individual health insurance market were reformed and functional, as is the case in most states, this option would be available and likely attractive to the 100,000 employees working at the 23,000 Maine small businesses with less than 10 employees.