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Small and medium-size employers looking to save money on health benefits could buy catastrophic health insurance for their employees under plans that UnitedHealthcare has begun marketing in Kentucky and Colorado.
The high-deductible Catalyst Choice plans offer employees the option of upgrading to more robust benefits -- such as network coverage for doctor visits, lab tests and emergency care -- at their own expense.
The plans, targeted at companies with as many as 250 employees, are the kind of insurance offering that more employees might begin to see as employers try to ease the pressure of rising health costs.
Catastrophic plans, designed to cover major medical events, offer a more affordable alternative to employers that might be facing costs so high that they are considering dropping health insurance benefits altogether, said Debra Spano, spokeswoman for UnitedHealthcare.
Between 2000 and 2005, the percentage of businesses offering health insurance dropped from 69 percent to 60 percent, according to the Kaiser Family Foundation. Since then, the decline in companies offering coverage seems to have leveled off, said Gary Claxton, a Kaiser vice president.
Claxton said he has not seen many insurance plans like the one offered by UnitedHealthcare. They might save some employers from having to drop coverage, but catastrophic plans also could mean that employees will see a decline in the level of benefits they're used to. "If the employees don't like the coverage, it doesn't do the employer a lot of good to offer it," Claxton said.
Paul Fronstin, director of the health research and education program at the Employee Benefit Research Institute in Washington, D.C., agreed that cutting the level of benefits might not be in employers' best interests. "They're looking at ways in which to modify the plan without really excluding things," he said. "It's not as simple as shifting costs onto workers."
He predicted that as the economy weakens, companies might look to layoffs before they consider cutting benefits, because they will need to be sure the work force they have is a strong one. "It's almost easier to downsize than it is to drop a health benefit," Fronstin said.
Spano, of UnitedHealthcare, said Catalyst Choice is not a "one size fits all" plan. "It's being offered as another option in the market," she said, noting that the plans could be a particularly good choice for companies that have a young, healthy work force.
"We believe Catalyst Choice will enable more businesses in Kentucky to offer employee health benefit coverage and more employees the flexibility to tailor their benefits based on their own health care needs and budgets," said Dan Krajnovich, chief executive of UnitedHealthcare of Kentucky.
