Mary, who teaches smartness because she is, learns artificial economics is driving market demand…………….and she gets a self-imposed pay raise.
By Bill Rusteberg
Employer paid health insurance is a great benefit. The problem is most employers don’t pay for dependent coverage. The cost of adding dependents is out of reach for many working Americans. That’s why few take it. Those who do turbocharge adverse selection harmful to the offering. No one wins, everyone loses. That’s a problem.
The economic difference between individual health insurance and group insurance can be seismic. Most employers pay nothing towards dependent coverage while Uncle Sam often does for those choosing individual health insurance plans. Who would have ever thought!
Texas school employees know this. They should, they teach smartness. Dependent participation in district sponsored group health insurance plans averages less than 12% representing a small fraction of eligible dependents qualifying for coverage. Working Texas educators cannot afford the cost of dependent coverage often to the tune of $15,000-$25,000 per year……….and worse yet they can’t afford to use it.
Many purchase individual coverage for their dependents instead. Government welfare (subsidies) can reduce family costs below $200 per month and in some cases less than $50 or even “Free.” Free is good. Goodbye second mortgage! Hello pay raise!
Mary has group insurance through the Brownsville Independent School District. She can’t afford to add her dependents, it would be another mortgage payment. The district pays nothing toward dependent coverage. Mary, who teaches smartness because she is, learns she qualifies for Uncle Sam’s generous premium assistance program and enrolls her dependents on individual coverage for similar coverage with a net cost savings of 90%. How smart is that! She should get a bonus raise for her risk transfer strategy but she won’t. Instead, she earned a self-imposed pay raise. Hallelujah!
This is a case of artificial economics driving market demand. In more cases than you can shake a stick at government subsidies applied towards the purchase of individual health insurance is far more generous than what most employers can afford to pay. Group plans compete with individual plans and the latter wins almost all the time.
How times have changed!