Hobby Lobby & President Obama & You – New Insurance Products at a New Cost

When we remove the burden from an employer to provide a benefit, the burden of paying for that benefit will most likely fall to the employee.  President Obama has given insurance companies the right to contact directly employees whose companies opt out.  Since they will not receive certain benefits from their employer, insurance companies can approach those employees directly and offer them the opportunity to privately obtain the benefit no longer included in their employee benefit package.

This creates two significant problems.  The legal requirement that birth control services be free is in conflict with those on corporate policies privately obtaining contraceptive benefits for which they have to pay.  Secondly, the notion of group verses individual policy is now blurred.

Insurance companies feel they are entitled to be compensated for providing contraceptive benefits.   Providing contraceptive benefits was mandatory under the Affordable Care Act. Further, birth control is supposed to be offered without cost to the policy holders.  From the point of view of the insurance company, the corporation which purchases a plan from that insurance company is responsible for paying for the benefits included under the mandate to provide birth control. Since the corporation is opting out of paying for certain contraceptive benefits, and it is highly unlikely that out of the goodness of its heart the insurance company will absorb the cost of providing contraceptive benefits not covered by the corporation, the burden of paying “must” be born by the employee.  But the law says, the employee covered under this group plan should not have to bear the cost of obtaining birth control.  What is the real difference between charging the employee an additional fee for coverage verses having that employee pay directly for birth control.  From the employee’s point of view it is the same amount of money being taken from their pocket only in one case you call it premium and in the other case you call it a copayment.

The problem is lies in the plan the insurance companies ave devised for implementing the Hobby Lobby decision. When a company opts out of offering birth control related servies to their employees, the cost associated with providing those services is deducted from their premiums.  If the employees then individually request this service they must pay under a supplemental policy issued by the insurance company. Are we really naïve enough to think that the insurance companies are going to absorb these costs?  Are the insurance companies going to raise premium costs for everyone to cover the costs of providing birth control to individuals and then charge a surcharge to companies who choose to offer birth control to their employees?  This way insurance companies make even greater profits.  Insurance companies could choose not to solicit employees whose employers opt out of offering birth control and leave them to pay for it as if they are uninsured. This option violates the Affordable Care Act because the policy does not  offer one of my essential health benefits.

The second problem arises when we start making hybrid policies, part group policy, part individual policy.  In order to meet the affordability standards imposed by the Affordable Care Act, corporations will need to drop benefits, increase copays, and impose coverage limits.  Since insurance companies can now directly contact individuals, we are creating a system where corporations will provide only a skinny plan for their employees; providing only those benefits required to meet the legal standard.  Insurance companies will then contact employees directly.  They can now point out the coverage limits and upsell employees increased benefits at, of course, increased costs.  The beauty of this is that, since the insurance company obtained the health history of each employee when the company signed up, the insurance company can pick and choose to whom they will offer richer benefit packages and at what cost.  Insurance companies can offer more robust coverage to a sub group of employees who are healthy and can afford to pay for it.  They can discriminate against those who might most need these additional benefits.

No matter what, it’s all in the implementation.