HRA with a HDHP and Defined Contribution

If you are struggling to harness your health insurance premium increases and your rising per employee/year costs; look no further. It is probably time to take a look at an IRS-qualified high-deductible health plan with a corporate health reimbursement arrangement (HRA). You can also couple this with a defined contribution, or dollar amount/employee/month, and roll your company and staff in to a portal like Health Insurance Geeks to shop on their own. We can report back what folks over-spend and turn that in to a monthly pre-tax contribution for them through your payroll vendor. This is insurance 3.0 and what most brokers, carriers and other entities are not talking about a lot as we are in the middle of reform, and changes, and this scalps both of their revenue/commission flow. We are a tribe, an army if you will, of savvy folks blowing up the current system, in the name of consumerism. Once we have the right products in place, healthy consumerism for medical services will commence and that will end in pricing coming down dramatically, which in turn will stabilize premium structure. Remember we pay in premium for carriers to cover our healthcare needs which are held ransom by hospitals and physicians charging fees that can swing by 500-1000% from to the other, for no particular rhyme, or reason - for the exact same services. We have no real explanation, other than where someone went to school? Hard to quantify.

Consumer-Directed Health Plans

As we are in 2013, we are seeing the amount of small employers (2-199 employees)offering group health insurance decrease; and also the amount of employees participating in offered plans by employers decrease too. What does that mean? Well it means we have even bigger challenges to face once Jan 2014 comes and the next phase of the PPACA (Affordable Care Act/Obamacare) is implemented. If folks are not participating in plans now because of costs, what is going to happen when premiums rise, and Americans are forced to buy insurance or face tax penalties? Many think not much, while others say a windfall of Americans will jump on to plans. We are also seeing the amount of employer's subsidies of health insurance premiums for family plans decrease (2012 was hovering around 40%) and we are expecting that number to continue to climb to 50% throughout the coming years. The good news about the ACA for consumers are private health insurance exchanges. It seems public exchanges are getting TONS of pushback at the state level, though private exchanges are gaining momentum. For consumers whether they buy from carriers directly, public exchanges, or private exchanges, and with or without an advisor/broker, the prices will be fixed. A recent Kaiser study found 25% of folks in MASS Connector plans found it extremely hard to understand plans, and would always prefer having some kind of advisor. Assuming the section of polled folks was enough, many argue that an advisor is critical. More to follow from the Geeks at Health Insurance Geeks.

NY Health Insurance Exchange

On October 26, 2012 NY submitted its plan to HHS for approval to operate the state health insurance exchange. Read further from the NY State website:

http://www.healthcarereform.ny.gov/health_insurance_exchange/

Employer-sponsored Health Insurance - a Migration to Defined Contribution plans

A lot of meat on the bones in that title, but in a nutshell, just think about "pension" plans. Remember those old things? Well, yes, they were defined BENEFIT plans; now we all have 401k plans....do you like them? Probably if you avoided disaster from 2000-2006 and then again from 2006 to present, but many in the U.S. got hammered, me included.

Well 401k plans are defined contribution plans and we had a massive restructuring here in the U.S. over the last 20-30 years as employer's could not keep up with the liabilities. Well my friends we are just beginning that same process in the employer-sponsored health insurance market. With PPACA (Obamacare) here to stay, and the rising cost of medical care continuing to be a front-and-center issue in the U.S. we are in the early stages of seeing employers begin giving their employees a defined dollar amount monthly to employees (probably great for single workers but not great for families) to go and "shop" for health insurance and other employee benefits. So rather than defining the "benefit" they give, employers are defining the dollar "contribution" to employees and allowing them to go shop on their own.

Companies like Liazon for example (backed by Bain Capital and other large venture capital firms) have invested heavily in the small business market (let's call that under 100 employees) rapidly moving away from employer-sponsored benefit programs. As such they have built an online shopping experience for employees to take the dollar amount provided through an employer to go and buy what is appropriate from employee- to -employee. If you step back and think, it actually makes sense. What my wife and I need is not necessarily the same as a co-worker across the room from me, yet we are usually given only a choice or two at that size market - under 100 employees.

So at my companies, www.nexusbenefits.com and www.healthinsurancegeeks.com we have also heavily invested in building tools to be able to ride the wave of change to defined contribution plans. We have yet to play the game of raising a series A institutional investment to go out and compete with the Liazon's of the world, though we align with many technology providers that allow us to build a Liazon solution tailored to each client. We have seen a large number of our clients bail on employer-sponsored group health insurance, or at least plan to do it on January 1, 2014 - that is when medical underwriting becomes illegal at health insurance carriers as a result of PPACA.

So let's fast forward to January 2014. We have bet the farm that our rate engine (offering individual and family plans tailored to each specific state market; so let's call that our own little private health insurance exchange) will enable us to quickly concierge health insurance alternatives for each employee of our former group health insurance clients, and coach our clients on what to offer as far as a dollar amount monthly - a la a defined contribution approach. We have market strengths in metro-NYC and metro-Charlotte NC; as such we will be rolling out the approach first to NC and second in NYC. Reason is simple......NYC is an individual health plan disaster and I am not so sure the Feds and NY State are going to be able to actually offer individual plans at an affordable premium. But let's not forget Obama is giving money away, so with that said perhaps he will just start printing money to do it - and perhaps the price point becomes paralleled to the existing small group health market in NYC. If that happens quickly, our approach will be a super solution in NYC.

Back to NC. As the existing individual and family plan market is robust in North Carolina state and the number of carriers offering products is too, we are poised for www.healthinsurancegeeks.com to become a form of a private health insurance exchange. We can link and tailor it to employers - let's say 10 employee companies to 100 employee companies - and allow each employee to work with a health insurance navigator who will assist them with their purchase; we call them Geeks! So employers will still be assisting employees, i.e. offering an employee benefit, and the employees will be able to purchase what is best from person to person. In addition, employees will be tasked with spending his/her own dollar allotment.

Presumably from a politically neutral standpoint, most agree without behavior change in the U.S. as far as how we manage our respective health, we are doomed. Obesity is growing at an alarming rate, citizens are becoming less active, Diabetes and Asthma are also growing, and we are seeing kids glued to Ipods, laptops, and TV screens....so what I am getting at is we can offer these products or universalize health insurance for all citizens, but without behavior change it is all for naught.

I could continue on my rant for many more pages, but I hope this is a good brain dump of what we believe we are in the early stages of converting to in the employer-sponsored health insurance market. We also believe this is good for smaller companies, employees, and competition. Finally, in my next blog, I will talk about how our clients are utilizing financial incentives to take healthy and preventive actions, and how wellness programs are essential to solving the crisis here in the U.S.

Empire BCBS To Abandon NYC Small Business Market?

What a crummy organization....BCBS plans should be broken apart in the U.S. plain and simple, or be forced to occupy less than 45% marketshare in any particular market....that would get some healthy competition.

They have long been regarded as subpar in the New York City Market (i.e. Empire BCBS) as most consumers would rather go to an NYC DMV, or Rykers Island than to be forced to call customer service at Empire. They are just awful....

So though it is not surprising, or unwarranted, Empire BCBS announced a few weeks back that they would terminate almost their entire book of small businesses and give those companies an option to buy one of 3 remaining and crummy products (that have never sold to begin with) or go about searching for another insurance company. This has created a move/buying frenzy with Aetna and Oxford frankly, and brokers have been moving large blocks of Empire BCBS business in droves. Again, Empire, so funny, they are just clueless, but then again, they are a Blue Cross organization, so what should I expect.

Well guess what, in a city with 11 million folks we are now down to only TWO (2) reputable health insurance companies - Oxford Health Plans (a United Health Group company) and Aetna. Emblem Health, the old "Atlantis" company, and HIP are options, but have never been considered real competitors to these two.

So, in another market where we have lots of customers for example, Charlotte, NC, we have at least 7 solid health plans - United Healthcare, Cigna, Aetna, Coventry Wellpath, Humana, and the local monopoly BCBS of NC...so, within a 50 mile radius of Charlotte we have like 1.25 million folks or something close to that, a medically underwritten market (unlike NYC's socialized community-rated market...which is double the price and imploding as evidenced by Empire's pull out) and 7 good options? Compare that to NYC and 11 million and you scratch your head? Well yes, you do, b/c Obamacare has been based on a socialized system because he is a socialist to begin with and we already have TONS of evidence that a socialized system will never work in the US so why base a dumb law (Obamacare again) on socialism?

If we do not change fast in the U.S. Obama is going to turn us in to a third world country.....we are in real trouble with healthcare, but generally speaking, we are on the hottest burner on the stove in just about every category because of this absurd administration....

Obamacare?

So where is Obamacare? Where are the efficiencies? How has he and his terrible administration set the U.S. for a better, more affordable system? Answer is simple....HE HAS NOT, and HE WILL NOT.

The only savior in the U.S. is consumerism and our company now has hundreds of small and middle market clients that have instituted consumer-directed health plans (CDHP)with enormous savings and cost-stability year in year out for the last 5 years while at the same time traditional plans have imploded.

Obama doesn't want to give credit to the savior because he did not come up with it. As a matter of fact consumer-directed plans have been around for a long time, but there was not an economic event that forced the adoption of the plans. Now rolling in to 2012 which undoubtedly will be another poor economic year (and even worse if Obama stays in office) we will be faced with the same challenges as before. Whether Independent, Democrat, or Republican, from the standpoint of health insurance I pray nightly we get a Republican President who understands consumerism and will listen to all parties. Our government in the U.S. can't even run DMV, or Medicare (remember that IS health insurance and our precious government has bankrupted it already!!) so why in the world do I want them touching the coverage I hold in high regard for myself, my wife, and 4 growing children.

Our clients have been seeing on average a 3% increase in costs on CDHP plans compared to 25% for traditional plans (in some cases closer to 40%)....proof is in the pudding, give me CONSUMERISM!

A New President

It is time, plain and simple. Obama must go, he has not performed and in the world in which I operate if I do not perform, I get fired. So should he.

We need a leader who happens to be President, not a President who has no leadership skills (sorry Obama, that is you).

Obamacare, terrible, must go....Economy, terrible, must be stimulated...Bernanke, come on you are smart, but this whole economy and the puppet government is starting to make me worry that Atlas Shrugged, the movie, is coming true. As a producer who generates revenue and jobs, this economy in the U.S. and the government trying to "do" everything has proven one thing...the government can't do much of anything profitable or right. Fire them too.