For Benefits Brokers viewing this I just want to let you know I work with brokers but am not a broker. I do sell non-broker services direct to employers but am not a licensed agent. I also consult brokers and provide tools and resources for a fee. Call me at 508-498-7591 if interested.
Over the past 6 years I have published several articles on the need to personalize health insurance (and get the employer out of the way) by making an individual insurance policy tax deductible. This happened partially through the introduction of the Individual Coverage HRA (ICHRA) which was effective January 1, 2020, but it did not go far enough. Since the ICHRA became effective I have analyzed 50+ employers across the country comparing their group health insurance program to alternatives on the individual market. While not all individual markets are competitive at this time, I have seen enough evidence to conclude that the move to a total individual insurance market is inevitable and it could happen with one quick stroke of the pen. The benefits of this change can be tremendous. Employees throughout the U.S. will reap benefits through lower costs, more options, and ultimately better health care.
The running narrative around employer-based insurance is that it is not broken. I disagree. An interesting statistic, that few in the business have realized, is that the number of employees covered under employer-based insurance is the same today as it was in 1998 while the population has been rising. (Source: Kaiser) Deductibles and employee contributions have also increased at rates higher than inflation and wage growth, creating a working poor population. (See chart below) I do not know how many more non-profits or home health care companies I need to look at that have 30% participation to support my position.
I have recognized a few things while analyzing the 50+ cases. First, I will say that employers are over-buying insurance for most employees. One size does not fit all and many employees, when given options, would choose more narrow networks with slightly higher deductibles and fewer pre-deductible copays if they can benefit from the decision. In Massachusetts, the average individual insurance buyer is choosing a plan that is 14.4% – 33.7% less expensive (depending on income) than the average large employer. (Source: MA Health Connector) This frees up an average of $2200 per year that can go towards a health savings account or maybe pay down one’s credit cards. Employers are forcing employees to pay more for health insurance leaving less money to pay for actual health care. Funding an HSA will make money available for first dollar care.
Another issue I am realizing, though I will not get into all the details here, is that the majority of the “decision support tools” guiding employees current buying decisions through employers are flawed. This is a big statement that will get some pushback. I will cover this in another article and back it up with data. My only point here is that these tools are also contributing to consumers over-buying insurance. Few who are buying health insurance have a true understanding of their real risk.
The current model of group insurance is a one-size fits all model. The employer buys one or a few options and asks employees if they want to participate in this employer purchased insurance. I have to ask, where in our personal lives does one size fit all? Everything is becoming personalized. Consumers, when acting in their own best or selfish interest, can make decisions and drive down costs. The employer in the middle is the problem.
Another belief is that employers have more buying power than an individual. That really is not true. Individual insurance is negotiated with the States and the individual market is one big risk pool. In most States insurance companies have tens of thousands of employees in their individual risk pools underwritten as one big group. Also, when one looks at the cost of running an individual program it is often 5-6% less than running a typical group program.
The current market depends on two things to “release the power of the markets”. First it requires the employer to “give employees the freedom to choose” by adopting an ICHRA. The second is the health insurance companies need to rethink their position on the individual markets. States can also lead the way by adopting the MA model of pricing health insurance. I have looked at all 50 States and MA has it right. In Massachusetts, individual and group pricing are required to be priced as one risk pool. In prior articles I have written that splitting risk pools is a key cause of the problems with the U.S. health insurance system. By putting individuals and groups in the same pool it stabilizes the markets and stops the gaming of the system by employers seeking better risk pools. For those thinking the that employers managing risk through all types of crazy cost containment programs is something they want to do I would argue that most would prefer to simply be out of that business.
This gets to my prediction, and a possible solution to saving the private health insurance markets, driving down costs, and ultimately improving consumer health care. Through Executive Order, the President (whoever it is) can make an individual insurance policy an eligible expense under a Health Savings Account. By doing this the employee could be in control, not the employer. An employee can ask the employer to pay them the money instead of buying their health insurance, giving the employee the option to buy what they want. The insurance companies would respond to this new demand and start focusing more on the individual market. Capitalism and market forces can work, if we let it.
This change could happen under a Trump or Biden Presidency. Trump has already indicated that he intends to expand options. Secretary Alex Azar said in September 2020 that, “We’ve created new ways for workers to have a broader set of insurance options through Health Reimbursement Arrangements, and the president pledged last week to push for more reforms to open up even more options.” These more options could be the Health Savings Account.
Biden’s big push is for a Public Option. I would assume the Public Option is chosen by individuals not employers, so he would be in favor of maintaining the ICHRA rules and possibly expanding individual choice. I want to add that I really do not understand the deal of the Public Option. If the hospitals and doctors would accept Medicare type reimbursements right now from any insurance company, they could do it without the government being involved. The Public Option could be run through a private market today if the providers would accept lower reimbursements from private plans. The current problem is the providers need the private markets to subsidize public plans. This may play out soon.
The move to a consumer-centric model based around individual health insurance is inevitable. I think employers, employees, and providers would welcome the change. It is an easy change because the individual health insurance markets and Health Savings Account Administrators already exist. Much like the ICHRA, with one stroke of the pen, tens of millions of Americans can be choosing their own health insurance in 2021. Employers can provide money to employees for health insurance as they are today, but when it comes to choosing health insurance they simply need to get out of the way.
The opportunity to deliver whole new employee benefits solution to market and create rapid growth is here. In this webinar we will introduce a model that is designed to help brokers grow by 20% annually while helping employers reduce health care costs, forever. And this is NOT the short-term type solutions most other brokers are delivering.
This webinar is by invite only as we are looking for just 2 brokers per market to deliver this new model. We think leads will be rolling in. Without giving up too many secrets the agenda is as follows:
• Review of the Changing Market Trends • Gaps in the Market and Opportunities • The Broker Blind Spots – What Many are Missing • How Brokers Can Grow Revenues • The Marketing and Sales Plan Overview
The time to act is now. Getting the message out in advance of the 4th quarter is an important to generating activity. To participate in this webinar just click on the Register Now button. If you have questions, feel free to give me a call at 508-498-7591.
The U.S. Health Insurance and Health Care Systems are broken. Costs continues to rise and the number of uninsured or under-insured continues to grow. The technology, resources, and opportunity exist today to improve health care and reduce costs; however, it requires a change in thinking.
This webinar may change your approach to employer-based health insurance forever. We will provide the data; introduce the technology; identify today’s obstacles; and provide a step by step approach on how any employer can begin the process to a much brighter health insurance and health care future.
The Agenda is as follows:
Quick Market Review Health Care Financing vs Health Care New Technology and Resources Obstacle to Change Reducing Costs The Path to Health Care Freedom and Better Health Care
This presentation is intended to get you thinking. It is time to break the mold and launch your business into a new and brighter future. To attend this webinar, just click on the Register Now Button. If you have any questions feel free to give us a call at 508-498-7591.
You have probably gotten invited to many ICHRA Webinars. This webinar will be different. We get into the weeds. We identify the gotcha’s. We bring ideas that most have never thought of. We will identify sales tips that can make a difference.
In this webinar we will cover the following:
– Review the Consulting Process
– Steps to Execute an ICHRA – 5 Gotcha’s that Cause Problems
– Review of the Vendors
– The Future – What to Expect This Coming 4th Quarter
– Demonstration of Our Proprietary Consulting and Modeling Tool
Comparing Group to Individual Costs
Bottom-Up Consulting Model (An N4one HR Creation)
Don’t ignore the ICHRA. This will be bigger than most think. We get into the weeds identifying things few have considered. To register just click on the Register Now Button. If you have questions give us a call at 508-498-7591.