Of Course Its Coming…

RiskyFrom taking tighter control over the health insurance market themselves to pushing decisions and costs down to individuals, businesses are experimenting with a host of new ways to offer health-care coverage, spurred in part by the launch of the Affordable Care Act, but also by the inexorable rise in the cost of medical care in the United States. The moves promise to change a social compact that has existed between employers and employees over health-care coverage for more than a half century.

SOURCE:  America’s ‘other’ health-care revolution – CSMonitor.com.

Of course changes are coming to employer based healthcare. In the same way that defined pension plans have totally evaporated in a twenty year period, healthcare paid by your employer will soon follow. And isn’t it convenient that the companies shedding a previously foundational obligation have something to blame it on. Obamacare.

The root cause of all the pushing expenses back on the employee comes when companies in the 1980s quit thinking of their employees as assets and instead saw them as liabilities. At first there was a trickle of companies who latched onto something called a 401k plan. The spin they used to drop their previous pension commitments to their employees what that they were giving them more “choices”. (I hated that term when it was going around 🙂 )They proudly announced that each of us could now manage our own retirement finances. But in reality what it meant was that instead of putting $x into a pension plan for you they could give you $x/2 to the 401K and make it sound like they were doing you a favor. Unfortunately the trickle became a flood in the 1990s and as a result there are almost no fixed benefit plans in existence today.

Since ever-increasing profits and dividends are the fodder for huge CEO pay the employees, as usual, get the short end of the stick. I realize that almost all of us think we can do it better than those other guys when it comes to investing money. We  rationalize that we can somehow time our investment decisions to maximize gain. Even for the “experts” stock picking and timing have always been more gambling than anything else. The fact that a broadly structured index fund beats more than 90% of the stock pickers is a testimony to that fact.

I admit that most defined pension plans were probably pretty conservative in the portfolios so the profit rates were somewhat low. Everyone thinks they can do better but what happens to their “private pensions” when they don’t? I personally witnessed a co-worker’s 401K get decimated because he had almost 100% company stock in his portfolio. He convinced himself that was his road to riches. He was convince he could make big bucks by sticking to his “plan” but in reality he saw about 80% of his retirement savings evaporate over a six month period!

I know there are those out there that say “Its my money so I should be able to do whatever I want with it, and many do just that. But what happens when they lose or spend it all before retirement? That is similar to those who have no health insurance today. All the rest of us end up paying for their failures in one mode or another.