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/
Thursday, December 27, 2012
Wednesday, December 26, 2012
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.
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.
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