Employees Unprepared for Increased Health Care Costs


While the duck is recovering from his injuries, Aflac has released a press release and a report on the state of readiness of American workers covered under employer-sponsored, consumer-driven health care plans, according to the Physicians for a National Health Plan “Quote-of-the-Day” newsletter.

The press release mentions a recent Aflac survey that reveals that employees are not prepared for increased costs, and may not want control of their options, and lack education about what is meant by “consumer-driven health care.”

The report finds that employees are not financially prepared, and that:

  • Only 24 percent of workers completely agree or strongly agree they will be financially prepared in the event of an unexpected emergency or serious illness.
  • Further, 46 percent of employees have less than $1,000 to be able to pay for out-of-pocket expenses associated with an unexpected serious illness or accident, and 25 percent of employees have less than $500.
  • Four-in-ten (40 percent) workers would have to borrow from their 401(k), friends and family to pay for out-of-pocket expenses associated with an unexpected serious illness or accident; 28 percent would have to use a credit card.

The report also states that:

  • Nearly three-quarters (72 percent) of the workforce have not heard of the phrase “consumer-driven health care;”
  • More than half (54 percent) of workers would prefer not to have greater control over their insurance options because they don’t have the time or knowledge to effectively manage it;
  • 62 percent of workers believe the medical costs they will be responsible for will increase, while only 23 percent are saving money for potential increases;
  • 75 percent of workers said they think their employer would educate them about changes to their health care coverage as a result of reform, but only 13 percent of employers said educating employees about health care reform was important to their organization.

Lastly, the report found that among consumers of health care plans:

  •  32 percent are not very/not at all knowledgeable about health savings accounts (HSA)
  • Three out of four (76 percent) are not very/not at all knowledgeable about federal and state health care exchanges
  • Almost half (49 percent) are not very/not at all knowledgeable about health reimbursement accounts
  • 25 percent are not very/not at all knowledgeable about flex spending accounts (FSA)

If American workers are unprepared financially to assume a greater portion of their health care spending, and if they are not aware of what “consumer-driven health care” is, nor are they interested in having control, what does this say about the state of the US healthcare system after January 1, 2014?

And more importantly, what does it mean for medical tourism, which is generally consumer-driven, and relies on patients to seek out medical tourism destinations as they would destinations for any other tourism?

For the workers’ compensation industry, this could mean cost-shifting from employer-sponsored health care plans for certain health care issues to workers’ compensation, which has happened from my personal knowledge of a subrogation company that recovers payments made by health care insurers, when the claim was actually covered under workers’ compensation. This would hasten the day medical tourism is implemented into workers’ compensation, so that employers and carriers can take advantage of the lower costs of medical care abroad.

While cost-shifting may happen, it is unlikely as most carriers would deny coverage for many claims that are routinely covered under health care, but would become financially unavailable to most employees because they are unprepared, or because their employer will want the employee to share the cost.

Whatever happens, medical tourism could see a sharp increase in business in the next few years.

This entry was posted in Health Care Costs, Health Care Reform, Medical Tourism, Workers' Compensation and tagged , , , , , on by .

About Transforming Workers' Comp

Have worked in the Insurance and Risk Management industry for more than thirty years in New York, Florida and Texas in the Claims and Risk Management spheres, primarily in Workers’ Compensation Claims, Auto No-Fault and Property & Casualty Claims Administration and Claims Management. Have experience in Risk and Insurance Business Analysis, Risk Management Information Systems, and Insurance Data Processing and Data Management. Received my Master’s in Health Administration (MHA) degree from Florida Atlantic University in Boca Raton, Florida in December 2011. Received my Master of Arts (MA) degree in American History from New York University, and received my Bachelor of Arts (BA) degree in Liberal Arts (Political Science/History/Social Sciences) from SUNY Brockport. I have studied World History, Global Politics, and have a strong interest in the future of human civilization in all aspects; economic, political and social. I am looking for new opportunities that will utilize my previous experience and MHA degree. I am available for speaking engagements and am willing to travel. LinkedIn Profile: http://www.linkedin.com/in/richardkrasner Resume: https://www.box.com/s/z8rxcks6ix41m3ocvvep

5 thoughts on “Employees Unprepared for Increased Health Care Costs

  1. Amanda Haar

    FYI< change made to your story but I have to agree with the copyeditor, the word "about" reads funny in the context. ??

    From: richardkrasner <comment-reply@wordpress.com> Reply-To: richardkrasner <comment+_3n878_4l9pqj05mppn6tv@comment.wordpress.com> Date: Wednesday, April 24, 2013 9:03 PM To: Amanda Haar <ahaar@cpronline.com> Subject: [New post] Employees Unprepared for Increased Health Care Costs

    richardkrasner posted: “While the duck is recovering from his injuries, Aflac has released a press release and a report on the state of readiness of American workers covered under employer-sponsored, consumer-driven health care plans, according to the Physicians for a National H”


    1. richardkrasner Post author

      No, the sentence is: “questions about [just] how good American hospitals are remain” is good. The [just] can be left out, but without the “about” it is stiff.

      Don’t you think?


  2. Mike

    Richard is absolutely correct…….as usual.
    Listen to him folks…he knows what he is talking about…..
    Hang on to your collective wallets and purses…..
    “You have to pass it before you can read it and see what’s in it……..and before you have to PAY BIG BUCKS for it………”
    Anything major and I’m going “overseas”…..
    with that said… anything devastating…I’d probably stay here


    1. richardkrasner Post author


      I thank you for the compliment, but I still believe that perhaps the experts are wrong, and costs may not go up. It is a case of being cautious and taking a wait and see attitude. Personally, I supported passage of ACA, but would want a single-payer system, because it works better than the mess we have now.

      Unfortunately, no one else is listening, and no one cares that I know what I am talking about, or that I know anything about comp or healthcare, as I can’t get anywhere, job search-wise. Resumes sent to LinkedIn contacts fall on deaf ears or blind eyes, as the case may be.

      Finally, going abroad for healthcare is not as bad as you might imagine. I have not done so, but with all the providers trained in the West, and hospitals seeking official approval from JCI, CMS, and other accreditation orgs, the quality is better (or so they say…see my post “Ensuring Patient Safety”), and the costs are lower.

      And remember, just as health care was once less expensive here, it will get expensive elsewhere too. What happens then is anyone’s guess.


  3. Ellen Freedman

    I tend to believe that AFLAC has it right. I remember sitting in an initial meeting of OFA during Obama’s first election and listening to others in the room that they thought that Health Reform wouid eliminate member co-pays, deductibles and coinsurance responsibility! I doubt that the general public has gotten that much more sophisticated in terms of understanding how employers and other entities such as the Health Insurance Exchanges have structured available benefit plans to keep utilization down and cost shift.

    Despite the subsidies potentially offered within the Exchanges to those most in need, I tend to think that the same individuals will be shocked when they are billed for cost sharing. In addition, there is significant pent-up demand in the population that previously was not able to access care and the mandated meaningful use and HEDIS guideline quality measures that will undoubtedly increase utilization and costs as well. Finally, there is probable “under-clubbing” of the disease burden/staging in the risk rating associated with those populations that may initially cause health care costs to skyrocket until that population is stabilized



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