Week 3

Some Employers Could Opt Out of Insurance Market, Raising Others' Costs

NYTimes
By Robert Pear
February 17, 2013
http://www.nytimes.com/2013/02/18/us/allure-of-self-insurance-draws-concern-over-costs

Summary:

Federal and state officials and consumer advocates have grown worried that companies with relatively young, healthy employees may opt out of the regular health insurance market to avoid the minimum coverage standards in President Obama's widespread law, a move that could drive up costs for workers at other companies. Companies can avoid many standards in the new law by insuring their own employees, rather than signing up with commercial insurers, because Congress did not want to disrupt self-insurance arrangements that were seen as working well for many large employers.

Opinion:

The new health card law created powerful incentives for smaller employers to self-insure. However, this trend could destabilize small-group insurance markets. It is not clear how many companies have already self-insured in response to the law. In our lecture, insurance is required to protect people from the financial effects of unexpected losses. I strongly believe that employers should provide an insurance coverage for their employees.