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 unaffordable 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 healthcare costs chronic disease progression generates.
To compound the fully-insured product problem, employers have no transparency, no ability to manage health, cannot keep any healthcare cost savings they provoke and more.
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 smallest of employers or to effectively manage the entire healthcare supply chain.
My goal is to transform the way employers provide and pay for healthcare resulting in lower cost, higher productivity and a better state of health for all plan participants.
We integrate technology to efficiently manage the current healthcare needs, which are fully identified, uniquely for each plan participant. Another technology, which I created, manages behavior/lifestyle choices that are responsible for creating 65+% of all healthcare spending. The last process identifies incentives that need to be created, implemented and managed. This creates an immediate ROI to the employer.
All this and more is accomplished in the “Newborn” healthcare benefit plans we’ve crafted. Our self-insured plans still offer HDHP, HSA’s and HRA’s. We pay agent commissions, unaffected by PPACA/MLR.