Why patch-work initiatives fail

The WSJ reported yesterday that an initiative to cover part-time workers is failing:

Although a coalition of 60 large companies last year announced the National Health Access program -- a plan to offer affordable health coverage to their part-time workers, who generally are ineligible for employer-based health benefits -- only 10 of the companies are actually participating so far...Through the effort, the employers will use their collective bargaining power to negotiate low-cost health plans for about three million uninsured part-time and temporary workers, contractors, consultants and early retirees. Employers will not subsidize the coverage. The packages offered under the program vary from allowing workers access to discounts on physician services to a high-deductible major medical insurance plan, and the Journal reports that several of the options "are essentially bundled health care services rather than insurance."

There's a couple things happening here.  Employees prefer comprehensive health plans over bundled services, so  they might not deem the latter worth paying for.  And if employees don't show much interest, employers won't invest the cost of designing tailored plans. 

There's a larger wall to climb than employee interest, which is that it's extremely costly for employers to subsidize health insurance for part-time workers.  That's partly due to the fact that health insurance isn't a part-time thing.  You theoretically need it all the time, and it's not easy to scale it back to a part-time level that's still recognizeable as insurance.  Because many employees work part-time to supplement income, devoting a big chunk of that income to health insurance can defeat the purpose of that second job.  Further, many part-time employees are covered by their spouse's insurance and don't need supplementary coverage.

Our system just isn't designed to cover the self-employed or part-time.  The cost sharing mechanisms are based on employers and their bargaining power.  And even that power doesn't go far -- huge firms weren't able to negotiate anything above bundled services for their part-timers. 

Within our current constraints, these workers not covered by their spouses will continue to struggle for care.  Tweaks aimed at the private market won't work here; it's just too inelastic.  Allowing these workers to buy into Medicare with a sliding premium scale, however, can at least affordably cover them in lieu of a better system. 

Comments

[Trapier K. Michael]

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Re: "Because many employees work part-time to supplement income, devoting a big chunk of that income to health insurance can defeat the purpose of that second job."

If you assume that these are uninsured people in need of insurance, then trading work for coverage makes the second job very purposeful.
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Re: "Further, many part-time employees are covered by their spouse's insurance and don't need supplementary coverage."

Well, then the people are not without insurance and we're having an irrelvant discussion about how to reach the uninsured.
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Re: "There's a couple things happening here. Employees prefer comprehensive health plans over bundled services, so they might not deem the latter worth paying for."

That's not what the piece concluded. It notes that other "major medical plans" were offered on top of the bundled services plans, yet that still didn't excite poeople. The real problem may have been a lack of commitment behind the program on the part of the companies, as some "did little to market the plans beyond sending out a few mailings."
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Trapier K. Michael
www.Marketplace.MD
www.blog.marketplace.md
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