We in the Virgin Island are used to paying higher prices for goods and services; it's the price we pay for living in paradise. We are charged an increased amount for these items to offset shipping tariffs, shortened shelf life of perishable foods and the overall higher cost of living shared by each of us. Medical costs too are on the increase and with them our monthly health insurance premiums.
The combination of the slowing economy, sagging profits and raising medical and prescription drug costs have forced Virgin Island employers as well as those nationwide to require their employees to pay a larger share of their health insurance costs.
Most employers are dealing with the double digit cost increases by raising deductibles. Approximately half of the nation's small employers surveyed by The National Center for Policy Analysis had deductibles of $500 or higher this year, double the $250 median deductible in 2000.
As medical costs and insurance premiums continue to spiral upward employers are expected to shift more of the costs to the employees. In addition, one in five surveyed said it was "somewhat or very likely" that within the next two years they would introduce a new type of health plan that would shift more of the costs to those employees who have the highest medical costs. Healthy employees would receive a bonus credit for future medical spending.
One of the hottest concepts in health care financing emerging in response to this trend are "Defined Contribution Health Plans."
Under a defined contribution health insurance program, employees receive a sum of money from their employer, say around $ 5000 per year tax free, to buy their own health insurance plan.
If the employer contribution fails to cover the full cost, employees would supplement it with their own funds. Or they could choose a less generous plan and pay less out of pocket. Either way the employees would make their own decisions about what deductibles are acceptable and what coverage level is fight for them.
The benefits to the employer would be that they would save money on administrative costs. Also, they would avoid expected liability lawsuits since the federal government appears likely open the employer up to more employee liability claims under the proposed Patients Bill of Rights.
The plan puts individuals not insurers, employers, managed care companies or the government; back in charge of their own hearth care decisions. Employees would have the incentive to shop around and spend their health care dollars more frugally.
This type of defined contribution program would save the employer money, administrative time and liability exposure.
However, now it places that responsibility squarely upon the shoulders of the employee. The employee now must have the fiscal responsibility to spend the "defined contribution" insurance premium for its intended purpose; to spend it wisely, prudently and not for a down payment on a new car.
The next few years will see a change in health insurance trends here and throughout the country, in fact it has already begun. Those employers in the forefront of this trend will realize the greatest savings by negotiating their employees defined contribution based upon the current insurance premium rates. The contribution paid to the employee could be any increment agreed upon from monthly to annually, it would be tax deductible to the employer but tax free to the employee
In the future, the near future, your Virgin Islands employer may no longer be responsible for your health insurance choices You will be solely responsible as the employee to analyze, evaluate and choose how you and your family will. be covered. It would be wise to choose high quality over low price since health rarely improves with age.
