Seismic shifts in the U.S. labor market have forced HR and employee benefit professionals to rethink their long-neglected relationship with part-time and contingent workers who are part of the growing gig economy. What’s at stake is both a business and moral imperative that requires an overdue re-evaluation of providing more accessible healthcare services to those who are least able to afford it. This, in turn, will help businesses attract and retain a critically important segment of the workforce in a challenging economy.
It’s almost inconceivable to think just how far the pendulum has swung since pandemic lockdowns dramatically altered the employment contract. Nearly 50 million Americans filed for unemployment benefits by June 2020, whereas the latest government estimate shows that there are more than 10 million job openings.
Despite inflation worries and recession fears, help-wanted signs are ubiquitous, especially in the service sector. However, scores of lower-income earners have grown tired of paltry pay without benefits, poor hours and back-breaking work—sparking a Great Resignation that we all feel in our daily lives with so many businesses being short-handed.
The time has come to help these individuals—who play such an important role in driving our economy—to afford basic everyday care that many participants in employer-provided health insurance plans take for granted. We all know that, apart from wages, health benefits are a leading consideration as individuals choose where to work. But they are also the biggest P&L expense after payroll in most organizations. The traditional fee-for-service model is clearly broken and unaffordable to Americans who are living paycheck to paycheck and have been further marginalized by being excluded from employer-provided benefits coverage.
Healthcare is an incredibly valuable benefit, but what good is it if the coverage costs too much? A benefit not taken is a benefit not provided. Employers have the power to change this. One powerful alternative to traditional health insurance is HealthShare arrangements that involve a group of individuals who agree to share large medical needs like hospitalizations, ER visits, surgeries, etc., and pay for routine care on their own. The monthly cost for HealthShare is less than half of a traditional insurance premium. This can be particularly beneficial for lower-paid employees, especially groups of fewer than 50 employees who aren’t subject to ERISA compliance, and a great strategy for independent contractors.
If HealthShare can provide protection against rare, large medical needs, a better approach for routine and everyday care is to make direct payments to providers, which eliminates unnecessary third parties that inflate prices. The total out-of-pocket cost for routine care is usually much less than under the insurance paradigm, wherein copays, deductibles and coinsurances burden consumers with ever-increasing costs.
Under this innovative approach, employees obtain membership to discounted services offered by a national network of providers at an incredibly low price point that makes sense for part-time and contingent workers. In lieu of hefty premiums that saddle most working Americans with untenable out-of-pocket costs, for example, direct-pay members spend just $5 a month, along with the full amount for each office visit with a fee that is both transparent and reasonable and usually less than the out-of-pocket cost of traditional insurance. There are no high-deductible health plans, coinsurance, hidden additional costs or surprise bills, nor are there any claims or explanation-of-benefit forms to decode.
A basic plan includes in-person acute and urgent care, lab work and imaging, which at $60 a year is about 3 cents an hour for those who work 40 hours a week. Other wraparound coverage is available under this model for those who would like to buy up. Three other services that can be added for $5 apiece each month include telemedicine, virtual mental health or teletherapy, and a pharmacy benefit. Those who choose all four would pay just $20 a month or $240 a year.
The arrangement can be financed any number of ways. For example, some employers may elect to pick up that cost for their workers and/or dependents, while others contribute toward the benefit with payroll deduction for amounts over the stipend. Direct pay also can be offered as a voluntary or enhanced benefit to full-time employees, as well as part-timers or independent contractors who can use their own debit or credit card to pay for services.
What’s so compelling about using alternative approaches to offer affordable healthcare to a growing segment of the workforce that has chosen part-time or gig work is how it dovetails into two important trends. One is health benefits equity to help level the playing field for marginalized communities. The other is mounting attention given to diversity, equity and inclusion initiatives across the workplace, which easily can extend to those without access to employer-provided benefits. HealthShare and direct-pay models enable employers to check both boxes and be seen as an employer of choice.
Lack of access to care causes healthcare inequities. Many Latino and African American females, for example, have higher morbidity and mortality at childbirth, while their breast cancer outcomes are far worse than Caucasian females. These groups disproportionately find themselves in part-time or gig work without affordable healthcare coverage.
Replacing our ailing traditional health insurance system with HealthShare and direct-pay arrangements can serve as a wise investment for employers that heavily rely on part-time or contingent workers and have struggled to attract or retain such talent. These alternative strategies remove the financial barriers that make lower-wage earners ration or avoid care, as well as cause medical debt—the leading reason for personal bankruptcy. They make perfect business sense and also are the right thing to do for an important segment of the workforce that has had trouble accessing affordable medical care.
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