XEROX: Changes Could Raise Insurance Costs for Some
All eyes are on Xerox Corp., a longtime "corporate innovator in health benefits," as it announced plans to overhaul its health insurance program. Xerox is considering giving employees between $5,000 to $6,000 a year to buy a health plan of their choice, abandoning the traditional approach of employer coverage. The move comes at a time when many companies are examining ways to revamp their health plans due to rising costs, increased government regulations and the potential for more exposure to liability. If successful, Xerox's plan could allow them to save money and reduce the threat of lawsuits as well as offer workers a wide range of options with the "prospect of pocketing extra cash, if they choose cheaper plans." Paula Fleming, a human resources official for Xerox, said the proposal would "free up" monies used for benefits enrollment, administration, HMO negotiations and quality monitoring. She said, "We would take that money and ... give (it) to our employees. From the employee standpoint they get more mobility and flexibility and choice to buy the plan that's best for them." Fleming added that the marketplace would keep prices down and ensure high quality plans, saying, "HMOs would be publicizing how they stack up against others in the region. You would see them advertising and working to get the quality ratings to attract additional customers."
Critics Say Plan Is Unfair
But policy experts warn that Xerox's plan could have a "devastating impact on less healthy and older workers," as they face higher costs. Princeton University health economist Uwe Reinhardt said, "This could totally unravel American health care." Workers would be forced to "sort out their ... choices in a complex marketplace." Younger, healthier workers, free to choose health plans, could opt for "cheaper, bare-bones coverage," leaving the elderly and sicker employees with the high cost of more comprehensive plans. Reinhardt noted, "The young people will get out and that will deprive the whole system of money." It remains unclear if workers will have access to group coverage and experts worry that individual workers will lack the bargaining power of big companies. Judy Feder, dean of policy studies at Georgetown University, said, "What's desirable about the employer system is that we have a mechanism for collecting health-care revenues, pooling risk and signing people up for health insurance" (Rubin, Los Angeles Times/Washington Post News Service/Richmond Times-Dispatch, 12/5).