The future of fully-Insured health plans compared to self-funding
We are seeing the most recent effects of PPACA/MLR on the HDHP benefit design in the Fully-Insured marketplace. Additionally, the probable restrictions on health insurance companies plus ramifications on employers who buy fully-insured employee health coverage is going to further deteriorate these group benefit plans. Insurance companies became the political scapegoat of health reform, and so, many of the reforms spotlight insurance companies for limitations & requirements that are guaranteed losers. It simply will not make sense to insurance companies and their investors & owners to lose hundreds of millions of dollars. The Median Loss Ratio (MLR) requirements will limit insurers to only 15% of premium dollars for non-medical expenses (20% for individual policies). That pretty much cuts out brokers & agents, HDHP and many of the top-heavy operations of insurance companies… unless those insurers do like airlines and start adding all sorts of separate add-on costs. However, employers will resent the extra costs as simply more expense.
The fully-insured group contracts already had their issues and problems. The renewal practice for the last 10 years, of moving to higher deductibles and higher OOP’s, traded benefits for premium credits. Plan participants with chronic illness sacrificed disease treatment compliance because of their higher out of pocket cost. Disease progression sped up; people began getting sicker, quicker. This caused the insurance pools to call for double digit increases to keep up with the higher health care costs chronic disease progression generates.
To compound the fully-insured product problem, employers have no transparency, no ability to manage health or health care, cannot keep any health care cost savings they provoke and more. You will see the traditional small group insurers move into the small group self-insured marketplace this year. CIGNA, Anthem, United Healthcare and others already have.
Why self-funding? By definition, self-funded plans, have no profits, most have fiduciary protections, so the punitive restrictions forced on health insurance companies do not apply. Also, there is much more control & flexibility for employers to design and administer their plans for the wants & needs of each particular workforce. So, the kinds of controls, limits and governmental second-guessing are not involved.
What about the current, historical self-funding plans in the market? They will continue in the market, although, the increase in the quantity and sophistication of administration and added services is going to require re-tooling from the very different thinking & laws of insurance law to the very different employee benefits & ERISA law. They are not designed to service the small employers or to effectively manage the entire health care supply chain.
Why use our solutions over the "Big" named carriers? Our strategy transforms the way employers provide and pay for health care resulting in lower cost, higher productivity and a better state of health for all plan participants. The 'Big" named carriers do not have the health care management technology and new services that lower the cost of health care procedures and pharmacy. Our products manage current health care needs, which are fully identified, uniquely for each plan participant. We manage behavior/lifestyle choices and stimulate better choices through education, incentives and penalties. We lower and avoid the cost of health care. Health care costs, not rates is what needs to be focused on. Our solutions immediately lowers costs and creates significant, on going positive ROI to the employer.
All this and more is accomplished with the new "2 Tier Deductible" health care benefit plans we've crafted. Our self-insured plans still offer HDHP, HSA’s and HRA’s. We pay agent commissions and are unaffected by PPACA/MLR.