With word that IBM (IBM) is ousting 110,000 retirees from its health insurance program at the end of the year, you could argue that "Big Blue" is becoming more like "Big Black and Blue" due to the holiday season beating it's imposing on its former workers.
Instead of being subject to infinitely higher annual costs to insure its current and former workforce, the computing giant will instead make a lump-sum payment to Medicare-eligible participants and have them, in turn, buy their own policies. After all, President Obama's insurance exchanges, which offer "window shopping" and competition, are set to launch October 1.
As my co-host Jeff Macke and I discuss in the attached video, some people will likely do better under this open-market system, but some will surely do worse. In fact, the ones apt to be hardest hit will be the ones who need insurance the most — the elderly who live on fixed incomes.
Of course, IBM is far from alone in pursuing this penny-pinching path. New research shows that nearly half of the companies that still offer health plans to their retirees say they expect to drop them within the next two years. While this transfer of liability, if you will, would seem to put more people on public health care plans, it is hard to say for sure, since thorough cost and benefit analysis data on a large scale is not really available yet.
The same uncertainty holds true at the other end of the spectrum, where countless young adults who are comparatively healthy but uninsured are expected to seek out and buy their own policies or face a fine. Again, no one knows yet exactly how many will pay up, but as a demographic group, these young post-graduates are typically more inclined to spend on devices and downloads than insurance deductibles.
What is known, however, is that if the majority of this young group decides to pass rather than play along, then the entire system will be getting squeezed from both ends of the snake.
- Investing Education
- Health Care Policy
- President Obama