business news in context, analysis with attitude

The Wall Street Journal this morning reports that drugstore chain Walgreen plans to "disclose a plan to provide payments to eligible employees for the subsidized purchase of insurance starting in 2014. The plan will affect roughly 160,000 employees, and will require them to shop for coverage on a private health insurance marketplace. Aside from rising health-care costs, the company cited compliance-related expenses associated with the new law as a reason for the switch ... Under Walgreen's new arrangement, to take effect in 2014, the firm will pay a fixed amount for employees to select coverage options in a private insurance exchange run by Aon Hewitt, a consulting unit of Aon PLC. The exchange will offer up to 25 different plans in some states.

"The options include HMO-style coverage with no deductibles and lower out-of-pocket costs than some plans. Also available are bare-bones plans with higher deductibles and leaner coverage. Workers could have premiums costing as little as $5 a month, Walgreen says, to appeal to the 36% of its employees who are single and under 30 years old."

The company says that it is unclear at this point how much money Walgreen will save over time, nor whether its employees will end up spending more on health care coverage.

It is just the latest case of a major employer making changes in how it is offering health care benefits; in recent months, companies including IBM, UPS, and Trader Joe's have all made changes while citing the expected impact of the Affordable Care Act (ACA), often referred to as Obamacare.

The Journal notes that "like the shift from pension plans to 401(k) plans beginning in the 1980s, the moves mark a transition in which employers are handing their workers more control over their benefits, some experts say. But as companies set their contributions at fixed amounts to limit benefits spending, workers could wind up shouldering a greater share of the burden if health costs increase."
KC's View:
I suspect we're going to see versions of this story repeated a number of times over coming months, so I'll try to avoid beating a dead horse.

As I said the other day, I recognize that there is both practical and philosophical resistance to Obamacare, which is at best a flawed law. But it is the law, and I wish that rather than debating funding and defunding, the Congress would work with the Administration to figure out how to fix the flaws. To be fair, it is hard to know how this will all turn out once the law has been fully implemented, though I personally think that mandating the coverage of pre-existing conditions, and the coverage of young people until age 26, are positive changes that already have been game changers for a lot of people.

I do think that if shifting financial burdens to employees also means that personal responsibility for one's own health also will be emphasized, that's probably not a bad thing.

Too many questions, and not nearly enough answers.