I’ve talked to several people over the last two days who pointed out to me that Walgreens is moving its employees to health insurance exchanges that are part of Obamacare. And then I saw Republican Congressmen saying the same thing on various cable news stations. But the Walgreens story is not true. The truth is that Walgreens is changing the way its employees select their health insurance – and actually giving them more choice.
A Reuters article says:
Walgreen Co is moving 120,000 employees to a private health insurance exchange from coverage provided directly from carriers, the company will announce Wednesday.
The pharmacy chain will join 17 other large employers on the Aon Hewitt Corporate Health Exchange as part of a growing movement to offer employees fixed dollar amounts to purchase their own plans on such exchanges.
The end-cost to employees depends on the plan chosen, but they typically get more options than under traditional arrangements. Private exchanges mimic the coverage mandated as part of the Affordable Care Act. Enrollment in the public exchanges starts Oct. 1.
So why is Walgreens changing the way it provides health insurance to its employees? Perhaps the premiums on the exchanges are better than what the company could negotiate on its own. While Walgreens has 120,000 covered employees, joining the private Aon Hewitt exchange means the group will be over 300,000 and will soon be 600,000. Multiple insurance companies will compete with each other and premiums for each plan will reflect the competition.
Walgreens will give each employee a certain amount of money and send them shopping on the Aon Hewitt exchange. One employee might choose a bronze plan with a lower premium and keep the extra cash for himself. Another employee might choose a higher-cost plan with lower out-of-pocket costs. Choice is good, right?
Is this kind of choice a good thing?
At first glance, giving employees this kind of choice sounds good. But will people make good choices? Will the employee with two kids and a wife choose to hold onto his cash and pick the lowest-cost-but-high-deductible health insurance plan on the exchange? Then his kids have health problems and he’s stuck paying thousands of dollars out-of-pocket…. and he charges this to his credit card…. and he doesn’t earn enough money to pay off the credit card….and the downward spiral begins.
People who have been fortunate enough to work for large employers have generally had good health insurance as part of their benefit package. They didn’t need to think about their health insurance choices. They didn’t need to be smart enough to analyze the pros and cons of various health insurance options. The employer was the daddy and he took care of his family. Dad mad all the decisions. By moving employees to private exchanges, Dad is still giving them money to pay for their health insurance, but Dad is leaving the decision details to the employees. Hopefully employees make good decisions.
The concern I’ve heard is that when health insurance premiums go up, companies will not increase the amount of money they give to their employees to pay for their insurance. This is a valid concern, but I think the more immediate question is whether or not employees will make good choices for themselves and their families.
I have met doctors and lawyers who made bad choices when it came to their own individual health insurance. It cost them hundreds of thousands of dollars when they got sick and discovered they had lousy insurance. I worry that most people will go for the lowest-cost plan – which might not be the best choice for their family. But then again, because of Obamacare, the highest family MOOP is $12,700. But then again, what person making $10 per hour at Walgreens will have $12,700 to cover his family deductible?
Ah, for the good old days when the company was like family and Dad took care of his employees. Those days are going, going, gone – but this is not because of Obamacare. It’s just the way it is in America.