As we near the presidential election most of us are wondering about the impact to our health insurance plans and costs. The Affordable Care Act (ACA) has had significant impact on companies of all sizes. But there has also been some good born out of the law, and most of it is centered on development of technologies to support new plan designs and pricing, data accessibility and transparency.
Smart Business spoke with Aaron Ochs, consultant at JRG Advisors, about technology that is enhancing how employee benefits can be managed today.
How is technology improving health plan designs and pricing?
A new approach is to consider self-funded and partial self-funding quotes from multiple carriers. Self-funding is typically viewed as out of reach for small and midsized employers, but that can be overcome with health risk data and stop loss insurance.
A risk analysis can gather employee information. It generates an assessment and utilization summary that most employers with fewer than 100 employees never see. Armed with meaningful data, an employer can confidently consider alternative premium funding. And, employers can educate employees about health, wellness and cost-effective purchasing choices. The data also can be used to create the plan that achieves a company’s goals — reducing claims costs, improving employee health and/or incentives to make cost-effective health purchases — putting the employer in a position to obtain better premium rates.
Another new health plan delivery model is the private exchange platform, which fits with a defined premium contribution and provides choice and online shopping.
New technology helps employees find affordable options by comparing independent pricing information among providers and hospitals, showing the cost of care before you receive it, for both in- and out-of-network coverage.
Family health insurance premiums rose 397 percent since 1995, while household salary rose only 15 percent. So, transparency is critical. The only way to offer affordable health insurance coverage is to ensure employees have access to affordable care. Higher medical costs don’t result in better medical care — only higher medical bills.
What are examples of how the new technologies are working?
Example 1 — A company with 40 full-time equivalents (FTEs) and 30 employees that are fully insured receives double digit increases year-after-year. About 60 days before renewal, the company provides its employees with an online link to complete a family profile and answer 15 health questions. The data is compiled to a group-based risk assessment, and if feasible, used to shop for self-funded options. Now, when the company receives its renewal, it already has a self-funded quote option, or knows that fully insured is the best fit. Either way the enrollment is complete, as the information provided by employees is fed electronically into any health insurance company quoting and enrollment system.
Example 2 — A company with 30 FTE and 19 employees that are fully insured receives a single-digit increase. The group completes the online risk analysis and learns it’s overpaying premium. The employer then provides a member dashboard that gives employees real claims data on outpatient services, making them better shoppers. This saves the company even more money, as its self-funded quote assumed the worst and was still a more cost-effective option. The business gained composite rates, based on tier, not age, bands, eliminated ACA fees and taxes and saved thousands.
Example 3 — The company’s risk analysis determines its health history isn’t good. It needs to remain fully insured, but the premium is unaffordable. The company determines a dollar amount it can support, and the employees shop from a menu of plans, which are delivered on a private exchange. The employer can provide many benefits, but still control costs and reduce administration. During the benefit year, the company uses the data to implement a wellness program. Within two years, the group has control of its health care costs, has more educated employees and is a fit for self-funded plans on the private exchange.
The changed landscape of health insurance requires a new approach to benefits, in order to control costs, provide options and create a quality benefit experience for everyone.
Insights Employee Benefits is brought to you by JRG Advisors