CFOZone.com - The Network of Corporate Finance

If Pres. Obama's health-care reform fails, you'll see a stampede of employers dumping their medical coverage for workers. Others will simply foist the bulk of costs onto workers.

Essentially, company health-care coverage will follow the route corp. pensions took. Employers will offer access to plans--at group rates--but won't pay for 'em. Fact is, HSAs are the 401(k)s of medical benefits. They get employers out of the health-insurance biz, the same way that defined contribution plans got them out of the investment biz. Only difference is that employee-purchased plans eliminate an employer's exposure to runaway health-care insurance costs. DC plans eliminated their exposure to underperforming investments.

You can mark it down.

Sounds like a very likely and very under-discussed effect. Gone are the days of the altruistic corporation, certainly.

Interesting comparison.

When you think through the accounting, I believe pension liabilities are capitalized and the funding expense smoothed, whereas premiums for health insurance (except for retirees) is fully expensed, and because the latter has a bigger impact on the income statement, there may be an even greater incentive to dump health insurance than pensions.

But that's probably gettng too deep into the accounting weeds. At the end of the day, a cost is a cost, and in the current environment, anything that can be shed, will be.

Very scary stuff for the average worker.

I think eventually we'll see that people with 401(K)s probably won't save sufficiently for retirement and those with HSAs won't pursue necessary medical treatment.

It's highly unlikely that the elimination of benefits will be supplemented with increased pay to cover any of the new costs. Those paychecks are just going to get lighter and lighter. Bad news for the economy as a whole.

Starbucks is reinstating 401 (k) matches but shifting more health care costs to employees. Higher deductibles and increased co-pays are here to stay.

While some companies like Starbucks will reinstate 401k matches, other goodies will take a while to come back. A recent Watson Wyatt survey of nearly 200 employers showed that one in five employers will keep salary reductions in place, and another 20 percent are unsure what they will do. Nearly half said they do not plan to reverse the increases in the percentage that employees now pay for health care premiums.