Insurance Is Not Always Beneficial to Employees - Essay Example

Task Insurance Is Not Always Beneficial to Employees Introduction Any investment in improving the health of employees only ensures an augment in the level of production hence profitability. Therefore, there is the need to ensure that every individual in the company is contented with the working environment, and with the benefits got from being employees to the company. Since health is of great importance, it is one of human capital in an organization. The more the number of employees in a firm, the less there will be investment in their health, and making it risky for their future safety. Health insurance reduces tremendously an individual’s medical care cost. In the United States, for example, many employees get Insurance policy through their employers where the employers help pay the Insurance policy. When the employer insures one, it is usually through a managed care plan that are health insurance plans that provide health care facilities to members at reduced costs by laying down contracts with medical facilities and health care providers. Employer based Insurance is often much cheaper as compared to buying individual Insurance, hence many people rather have their insurance bill cut from their salaries. The United States unlike other industrialized countries has a different case in that it does not have a national Insurance System. It is important to be insured because one cannot always tell when they are going to need the medical attention. There are vast advantages of getting employee-based health insurance. In the essay, I will look at health insurance in group verses individualized context, explore the advantages of employer based health insurance plan and discuss that insurance is not always beneficial. Group verses Individualized Insurance Employment based Insurance is an example of group based Insurance. Insurance companies offer cheap packages to groups rather than individuals because with many people registered, there is a high profit returns margin. Even though collectively it may be expensive to buy on an individual level, to a company it is much cheaper. Many companies when buying insurance for their staff end up buying most of the packages hence this is beneficial to the individuals. Another advantage of group insurance policy is that it is much easier to obtain in that there are little procedures to be followed, which would in turn delay or even terminate the whole application process like inquiring about the health history of individual members. Group insurance policy is definitely the cheapest form of insurance available. However, as compared to group insurance, there are numerous advantages of individualized insurance plans. Firstly, one is able to customize the provisions they may want included or neglected in their package. They may also choose to regulate on the deductible amount of payment that the insurance company does. It also enables individual to choose the doctor that would be conducting their services. Here the price range may be elevated as compared to group insurers, but the services are better. It may also be exceptionally costly particularly when one runs a high risk being ill or has high health risk qualities. Advantages of Employment Based Health Insurance Plans A health plan would gain more if groups of individuals with low health risks were enrolled in it as compared to unhealthy list of individuals. In the United States where the employee health insurance benefit scheme is purely voluntary, there is a great chance that a group of highly unhealthy individuals are registered in the plan. Insurers would often prefer to enroll a group of individual as compared to the specific individual. Employment based insurance groups are one of the individual groups that are always considered to be formed for the sole purpose to offer their employees health insurance. It does not discriminate and whether the individual in the group posses a high health risk than the other, they will automatically qualify for the system. Not only are employers capable of purchasing health plans on a cheaper value than individualized purchase, they can also act as the advocates of their employees especially when there is a dispute involving the insurance scheme. Since employers insure a large group, the insurer is most likely to listen to a group rather than individual for fear of losing the profits they may be making. Employers can easily complain about the service of the insurer, demand changes, and even threaten to change insurers if not satisfied with their service. This in turn improves efficiency and promotes satisfaction within the employed staff. Gavazza and Fang suggest that a low investment in health expenditure during working years eventually lead to an elevated medical expenditure during retirement years. Employees with longer job tenures spend more money investing in health insurance as compared to those with shorter job tenures. In the retirement age however, those who had initially invested little on health insurance when working may end up paying more (Gavazza & Fang 2). They further calculated that the individual, who spends most in insurance during his working period, ends up saving about 2.8 dollars when now investing during retirement. Health insurance helps to determine the company’s rate of human investment accurately because unlike other human investments, it is actually conducted by a third party, medical experts who ensure that the process is well documented and accounted for. It actually gives a quantitative analysis of each employee’s contribution toward human capital investment. Disadvantages of Employment Based Health Insurance Plans There never exists a random employment procedure in that every individual is capable of choosing what career to pursue according to his or her individual capability and expertise. In general, individuals who spend more investing in health insurance while working end up paying less when they retire. Depending on the physical condition, one may end up quitting his/her job in order to seek medical attention hence an increase of employee turnover. Job lock implies that workers are less likely to leave their jobs that offer health insurance benefits for others with non or inadequate health insurance benefits. This in turn improves job tenures in firms to enable them achieve maximum profits. This relation proves that companies invest more in health benefits in order for their employee turnover rates are reduced. It is not necessarily true that employees with high health problems would rather choose jobs with health insurance in order to gain benefits from it. Some companies would rather seek to employ individuals with lower great risks so they can benefit from the health schemes they have implemented for their workers. This fact is true because individuals who tend to visit doctors less frequently benefit less from health insurance policies. Employee Health insurance promotes job lock that ties the individual worker to their jobs. There can never be a portable health insurance scheme where an individual can quit one job and retain their medical benefit that they possessed with their previous employee. Several disadvantages may be brought about by quitting a current job to the other when one has health benefit schemes to another. It would probably mean that one has to go through certain processes like getting to find another doctor who will then have to handle every medical demand as they change the health plans: There may also be changes making it difficult to qualify for another health insurance plan hence a period of being uninsured may follow. Job lock also indicates a scenario where there may be less beneficial health benefit schemes by your new employer as compared to your previous one or even being uninsured at all. These are some of the disadvantages that health insurance bring out as a result there is job lock making it difficult for the individual to better themselves economically when they get better job opportunities. One remains tethered to an organization since they dread losing their health insurance arrangements. Very little employees offer health insurance plans. They however have a limited list of choices when it comes to choosing the type of health insurance policy one wants to have. Individuals tend to be happier when they have a variety of plans to choose from as compared to only a limited amount of choices; as a study revealed 56 % loving a wider choice list to 43% who did not mind having the limited list to choose from. Since this condition is only favored when one opts for employment health insurance schemes as compared to individualized scheme, it would be better to be self insured in order to get a wider list to choose from, but this in turn, is much more expensive. Employees then have no choice but to accept these limited terms and be satisfied with the conditions that they may be having. According to Fronstin, an approximated number of more than 43 million Americans most of them being the elderly were uninsured in the year 1997. There is a growing populace being employed every day and it is a difficult task to employ all of them. This fact leads to a report that many small companies would rather not offer health insurance schemes to individuals and on the other side, individuals opting to forgo insurance just to save up enough money to conduct other businesses or apply for much affordable health schemes. This in turn has got consequences in that the productivity of the employees may be affected this in turn having an effect on the company’s returns given the fact that health risks can never be predicted. For the individual, there may be difficulty in accessing better health services that he/she may have at their disposal had they been health insured. The current tax laws provide that individuals that receive insurance from their work place are not to pay taxes for the benefits they receive. There is a noticeable difference in tax benefits between individuals who buy insurance on their own and those who get insurance through their employers. Although it is thought that medical insurance costs fall on employers who spend so much money investing on their employees to have them covered, the fact is always not true in that it is workers who end up being charged in their overall wages and salaries. Further explanations about Employer Health Insurance There is evident monthly deductions on their salaries to cover insurance costs so instead of one questioning why employers pay so much money to insure their workers, it should be the opposite. It is not always beneficial to have health insurance even though safety comes first. The deductions made on individual salary may be adverse in that the charge greater when calculated annually. The health care benefits may be put in place to aid an individual whenever they get health complications but it may end up not being implemented. This is evident in individuals who experience low or sometimes rarely have health complications. In some instances, there may be a need to visit a better-qualified professional to help with a particular medical condition, but instead since there are limited choices to select, there may be provision of poor medical attention. Employer based health benefits limit an individual to only a few selected cover conditions. This may lead one to spend extra amount of money when there is a need to solve grave medical conditions. In another instance, an individual may experience little or no development because of fear to lose the benefits that the particular employer offers. An employee may be offered a better job opportunity than the one he/she currently holds but insurance, in our case health insurance may make them make different choices. There is a stiff insurance plans which does not allow the employee to continue enjoying the specific insurance benefits that they once had with the registered source, in this case insurance registered under the previous employer. There may also be other complication in that it is not always guaranteed that he/she will be again offered another health insurance benefit scheme. In conclusion, situations like this often ties down the employees to their works rather than quit for better opportunities due to these difficult options. Job lock can be tough to individuals who especially have larger families and may want to improve their living conditions. Buying insurance is an expensive process, especially when buying on an individual level. This leads to the purchase of insurance as a group that is easy to posses. Insurance is often important to individuals especially because it offers a sense of security and should problems arise in future, they can be managed without pressure. When buying insurance as an individual, in our case health insurance, they are procedures that the insurer has to follow before they can issue cover. A medical report has to be conducted to ensure that the person is in a sustainable health condition and that there is no serious history of health complications. Most insurers would prefer persons with little health risks because they are easy to manage, that is probably why they raise the price to getting individual cover. A group insurance on the other hand, is favored because it brings on board many people to the insurer meaning an increase in profit. Most people tend to go for group insurance because it is easier to get and has more advantages than the later. Conclusion Though the essay generally talks about disadvantages of health insurance to individuals, the advantages always outweigh the disadvantages. Most individual health insurance schemes are always beneficial to most high-income earners. Research has shown that most people spending more when employed on health insurance end up saving on a lot of money during their retirement years. An individual would rather get insurance through their employer than personally due to the easy access and reduced cost experienced. Employers also see to the fact that their employers are satisfied with the services they receive from both their company and the benefit scheme. Human resource is a major investment in an organization and there is a great need to reduce on job turn over. It is also proved that an increase in employee contribution and efficiency, there is a significant increase in returns (Gavazza & Fang, 2). Employer based Health Insurance is therefore not always beneficial to workers as discussed in the essay because it limits the employees on the policies they could have gotten if they had been self-insured. It also restricts job turnovers and individual improvements. There is also a disadvantage to those with low level of health risk because they may end up spending a lot in health plans through their company but actually enjoy fewer benefits. In conclusion, health insurance is an imperative factor to consider in one’s life because one cannot really tell when they may need medical attention. It is therefore mandatory to have health insurance whether through a group or individually. Reference Fang, Hanming and Gavazza, Alessandro. Dynamic Inefficiencies in an Employment-Based Health-Insurance System: Theory and Evidence. 2010. Web. November 28, 2011. Read More