A recent Politico article discusses the dilemma insurance exchange participation represents for health insurers. Exchanges could be a great way for health plans to gain millions of newly insured members. However, the regulatory and compliance requirements -- along with underwriting and pricing challenges -- make the decision to participate more complex. In addition, the general public has little understanding of health insurance basics. The federal government has agreed to do some education to ensure consumers are ready to navigate exchanges, but health insurers need to help.
The benefits of potential new membership seem to be outweighing the risks associated with the new heavily regulated marketplace. Come October 2013, if consumers come to the marketplace, our industry will find out whether the investments worked. Regardless of the year-one experience, health plans recognize that their businesses need to change to be more consumer-centric and are investing in solutions and services to support this change.
Vice President, Market Planning and Strategy
After years of selling insurance plans in large measure to private employers, the ACA now requires private insurers to begin selling to individuals. The ACA has mandated public Health Insurance Exchanges within which qualifying employees will pick and choose from among multiple insurance plans within their market. This represents a radical, disruptive change in the health insurance market.
Of special interest to many employers (and employees for that matter) is the simultaneous development of private insurance exchanges wherein employers contribute a fixed amount toward a health policy but then have the employee choose the level of plan and the insurer they prefer.
It is hard to imagine a more disruptive model to the health insurance industry’s historical approach to selling insurance. It is also difficult to imagine a more exciting time in the health care industry. Let’s all stay tuned!
William Bithoney, MD
Most commercial insurance plans have at least 3 options:
High deductible health plans, sometimes called Consumer Directed Health Plans (CDHPs) are becoming more popular among employers who offer health insurance to its employees. Most CDHPs have two features: (1) an initial deductible often exceeding $1000 (High deductible) and (2) financial support from the company in the form of a Health Savings Account (HSA) or a Health Reimbursement Account (HRA) to partially offset the high deductible.
- Varying deductible—the amount the employee has to pay, before any insurance starts to pay
- Varying co-pay or co-insurance –-a fixed amount (co-pay) or percentage (co-insurance) the employee has to pay for each service incurred
- Maximum out of pocket expense—a pre-determined amount the employee has to pay until the maximum is reached; after the maximum is reached, the employer pays 100% of the bill
Employees appreciate the lower premiums associated with CDHP, but can be surprised when an expensive medical procedure is purchased and the employee has to pay 100% up to the deductible. As an example, in a CDHP with a $5000 deductible, the employee pays the first $5000 in medical expenses every year before the insurance pays anything.
A CHDP is designed to motivate employees to be more judicious in selecting medical services, considering they are responsible for a higher portion of the bill. The expected outcome is the employee will choose higher quality or cheaper services.
Employees often make these coverage decisions annually, with little guidance from the employer as to which plan might work best. Fortunately, tools are now available to help employees examine their prior year’s medical costs to determine costs for each plan option. The new information allows employees to make more informed decisions. This tool should ideally take into account the actual medical charges incurred and provide options for varying coverage levels.
Another helpful tool is a cost calculator; employees using this tool can compare the cost of a procedure at different locations. The medical literature shows significant price variation for radiology, lab and diagnostic tests, even within the same community, so a cost calculator can be a great help. MRIs, for instance, might vary three to four fold in price with no difference in quality.
Truven Health Analytics has developed these tools to help consumers better understand the coverage level of insurance plans and the costs of services by plan. Users of our tools have experienced better plan decision-making and a decrease in medical costs. This is part of our mission--to use data to help consumers make more informed decisions.
Michael L. Taylor, MD FACP
Chief Medical Officer
The dynamic changes occurring in the health care insurance industry address two key, related questions: Should employers provide health insurance for their workforce and families? And related to that, can changes in benefit design or coverage models mollify the escalation in health care costs?
Many employers are at their wits end. With medical and premium costs accelerating at 2-3 times general inflation, this benefit is eating into profit margins and preventing companies from offering significant wage increases. However since people with coverage receive better care and as a consequence are generally healthier, and a healthy worker is more productive, it seems logical that employers provide this benefit.
What is not logical is expecting benefit design changes or health coverage administration models to improve the health of workforces to the extent necessary to stem the cost trends. Rather, employers must adopt benchmark efforts to build cultures of health inside their organizations. Companies that have done this enjoy flat health care cost trends and improved workforce performance. The starting point is building an understanding of what ails their covered lives, through data analysis integrating claims information with laboratory and pharmacy data, and then delivering programs that reduce the illness burden. Additionally employers must promote wellness and invest in risk reduction. Building health into a corporate strategy is good for the workforce and good for business.
Ray Fabius MD
Chief Medical Officer