Since I have been in the benefits business, either as a distributor or as a technology advisor, benefits communication has always been a problem and a topic of discussion. Brokers and employers have been developing fancy benefit booklets or creating detailed benefits statements all in an effort to get employees to understand and appreciate their benefits. Now with the advent of the web, brokers and employers have built websites and developed videos to give employees access to benefits information 24/7 often only to take them down a year or two later because nobody is using them. Trust me, I have seen hundreds of utilization reports and very few people are using these sites. Yet, after all this effort the majority of employees still don’t understand their benefits. I say enough already! Why don’t we try to make things easier? Well I have some suggestions.
Let’s start with the health insurance business. When I got in the business in 1986 many plans were still straight deductibles and coinsurance. In fact, one of the most popular products was the Guardian Insurance $100 deductible 100% plan. While I realize this type of plan was not sustainable financially, I will say it was simple. Concurrently there was the growth of HMO, PPO, and POS plans. Along with that came all kinds of copays and new rules on whom you had to see first before you saw someone else. Now there are HSA’s and HRA’s sold with high deductible plans. I think it’s funny that they call high deductible plans, Consumer Driven. Wouldn’t it have been easier if we just took a straight $100 deductible 80/20 to $5000 plan from 1986 and adjusted the deductible and coinsurance every year for inflation?
Today health insurance is very confusing and it’s going to get worse. I think my prescription drug card today has like 8 different copays. Recently I had treatment for a health condition and between my primary care physician, the specialist, the hospital, and the lab, I have so many bills I had to bring them all to the office and try to figure them out. Each bill had about 6 different figures on them. Between what they were billing, the discounts, copays, deductibles and coinsurance I could not figure things out. It’s been two weeks and the bills are still on my desk. There is no way the average American is going to figure this out. I have such a headache from this I need to see a doctor.
While I do realize the logic for creating these monster plans, it simply hasn’t worked. The health insurance business is becoming like the tax code. Everyone is manipulating the system to modify behavior. If you want people to buy more cars then you give a “Cash for Clunkers” tax credit. You want people to buy more houses you lower interest rates and give people an interest deduction. You want people to stop using Emergency Rooms you give them a $100 ER deductible. And that gets me to my prescription copays – I simply punt on that one. When I go the Pharmacy I just say “tell me what I owe you”, and I assume the pharmacy is telling me the truth. I have no idea whether the drug is name brand, generic, generic plus, or whatever new category has been created. Enough already!
Personally I think this whole country could operate on about 10 easy to understand health insurance options. As an employer and employee would I care? No. I don’t need all those options. I would bet that I could develop 10 plans that would be within 3% actuarially of every plan in America today. What I believe is that other than all the little nuances in health care plans (that nobody understands) the majority of plans in effect today are almost exactly alike. Imagine how easy it would be for employees, doctors, hospitals, etc… to understand and administer such plans. This would not eliminate competition. It would make Aetna’s Plan 1 the same as Blue Cross and United Plan 1. I would go to the doctor and say I have Plan 1 with Aetna and everyone would understand. To make things even easier I would go back to straight deductible and coinsurance plans. Obviously this is not going to happen with ObamaCare. Just think of what a $100 deductible 80/20 to $5000 plan from 1986 would look like if you adjusted the deductibles and copays for inflation.
I could go on and on with other insurance coverages. Your Spouse can buy Voluntary Life equal to 50% of the employee amount but the employee can get no more than 3 times earnings to a maximum of $150,000 when combined with the Base Life paid for by the employer. And if the employee is 65 and is subject to a reduction schedule it needs to be multiplied by 65% assuming his birthday is closer to the last renewal date than the next one. What?
If you are a benefits broker or insurance company the idea of making things easier may be considered blasphemy. I can hear all the arguments already. But one really has to honestly ask, does anyone really care about all these plan differences? Personally I don’t think so.