Are Health Care Benefits an endangered species?

If all things were equal--given the choice--most people would opt to work for themselves rather than for a corporation.

But all things are not equal. One of the huge reasons people opt in to corporate life are THE BENEFITS.

That motivation may be changing as more companies pull back on their health care benefits. According to Think Progress health care premiums have skyrocketed 73% in health care premiums since 2000.

"Premiums have risen by 73 percent since 2000. And businesses now spend nearly $450 billion on health benefits – not counting their Medicare payroll taxes. In a few short years, the health costs of Fortune 500 companies will exceed their profits. Despite these costs, the U.S. ranks 34th on life expectancy, 41st in infant mortality, and 37th, according to the World Health Organization, in health system performance."

As the Wall Street Journal and Minneapolis Star Tribune recently reported, Target Corporation has notified their employees that it may be eliminating its traditional health care plans.

"Target spokeswoman Lena Michaud said the retailer told its workers that its traditional health plan might be discontinued. But she said a final decision hasn't been made.

"This is a long-term strategy that will help both us and team members [employees] save money by encouraging them to take greater control over their health-care spending," Ms. Michaud said.

"Under its new plans, Target annually will contribute $400 for individual workers and $800 for families. Monthly premiums will drop to as little as $20 for individuals. But deductibles will be much higher than Target's traditional plan: as high as $5,000.

The other alternative is the health-reimbursement account, which is similar to health-savings accounts, except the employer funds them and they aren't portable. The premiums paid by the workers are higher than the health-savings accounts, but the deductibles are lower.

"These plans are great if you are healthy, wealthy or young," says Bernie Hesse, a Minnesota-based organizer for the United Food and Commercial Workers, which is trying to organize Target."

Critics say this approach to health care benefits reduces preventative care and creates an environment where people don't seek medical attention until they are really sick."

To get a hint of what their thinking may be, you just have to review a not so secret memo written in 2005 to Wal-Mart's Board of Directors by Susan Chambers, who was then Wal-Mart's Executive Vice President for Benefits( she has since been promoted) .The contents of that memo were widely reported in the New York Times and major media like CNN

"Chambers' memo proposes a number of ways that Wal-Mart could hold down spending on health care and benefits while minimizing damage to its reputation. Those proposals include nine "limited-risk initiatives" and five "bold steps."

The initiatives include increasing the number of part-time employees while making it easier for part-time employees to become eligible for benefits and offering a variety of benefits from which employees may choose.

Chambers also mentioned a plan already under way to add health clinics to stores.

The "bold steps" called for Wal-Mart to institute "consumer-driven health plans" with Health Savings Accounts that would go toward paying higher deductibles; restructuring the retirement program to put more money into health care and less into retirement; redesigning employment at Wal-Mart "to attract a healthier, more productive workforce"; making strategic investments to counter criticism; and improving communications about the company's benefits offering."

The Wal-MartWatch has excerpts from the memo including this one on the potential risk employees are putting themselves in for participating in Wal-Mart's Family Plan.

ON BANKRUPTCY … "On the Family plan, an Associate must spend between 74 and 150 percent of household income on healthcare (approximately $13,000 to $27,000) before insurance takes over completely. Though few associates reach this level of spending, those who do almost certainly end up declaring personal bankruptcy" [Wal-Mart Secret Memo, Page 6, http://walmartwatch.com/memo; New York Times, 10/26/05]

The decision to change their health care benefit is not just a benefits issues.. For Target, going from a company with a reputation for offering "some of the best benefits" available to a company whose health care program looks eerily similar to Wal-Mart's is a huge business risk.

Forget the bad PR --what will it do to recruiting and retention?Long-term will the savings on health care costs be worth the potential brain drain that could occur because of their leaner than lean health benefits?