Shifting Responsibilities
By Kate Kinkade, CLU, ChFC

This month’s news includes a number of items about  the shifting of financial responsibility for healthcare and retirement savings. Employers are shifting health insurance and retirement savings responsibility to employees; consumers are taking responsibility for healthcare risk from insurers, and safety net healthcare providers are shifting focus to patients with money.

The days of primarily employer-funded pension plans are long gone. 401(k) plans have been the bellwether of shifting responsibility from employer-paid retirement to shared savings programs. The key now is to make them simpler so more employees participate, but there is no inclination on the part of employers to take back the role of full retirement funding.

The same practice has been developing in health insurance; employee participation in health insurance premiums has been growing steadily. Employers have been unwilling to absorb the cost of increasing healthcare premiums and have required employees to pay a greater share. As employee costs have increased, employees have moved toward higher deductibles and now to health savings accounts with no insurance in place. Healthcare providers and facilities for the uninsured are now wooing insured and cash paying patients. They are looking to these parties to take responsibility for what the government programs can no longer finance.

The end of the line in all of this shifting is always – people. The consumer, the employee, the patient. As the cost of covering the uninsured continues to be shifted to the insured, insurance costs go up. If employees are paying a larger share the cost, more will opt out and there will be fewer insureds paying the cost of covering uninsureds and the spiral continues.

To come full circle to retirement savings, as more people retire with less than adequate savings, they will be dependent on Medicare without the ability to supplement with insurance, which will increase the number of underinsured people, adding to the spiral.

It’s easy to understand why employers are shifting responsibility for retirement savings and healthcare to employees. It’s because they can. And, in a competitive business environment, one would argue they have to. Unless all employees pay the cost, any employer who does so is at a disadvantage in pricing their products. Today, “every employer,” includes the globe.

In the end, only the higher paid employees will participate in fully insured health plans and only upper middle class people will pay for individual health insurance or Medicare supplements, which means this small group will be footing the bill for everyone else unless we find some other place to shift responsibility or a way for the right people to take responsibility. My guess is that we will get there when and if the cost to those who can pay is high enough that they demand a real solution.