I had an epiphany while researching a recent article on so-called “medical captive” insurance to help level the playing field for mid-market employers who pledge a more aggressive stance on containing their employee health care costs.
It got me thinking that President-elect Donald Trump and his advisers should become better acquainted with this issue before tinkering with the employer-provided health insurance system. And it reminded me of the time President Barak Obama signed the landmark Affordable Care Act, aka Obamacare, into law without any Republican support. The part that troubles me about both situations is that poor decisions were made, or continue to be made, in a vacuum with little or no thought given to unintended consequences or the impact on various stakeholders.
Let me explain further: My main source for the story suggested that these specialized arrangements are designed to wrest control from “managed care intermediaries that hold employee health data hostage” in fully insured group plans. His list of chief offenders includes so-called BUCA plans (i.e., Blue Cross Blue Shield, UnitedHealthcare, Cigna and Aetna).
He also noted that health insurance carriers withhold detailed claims information from the employers to whom they provide group insurance often under the guise of concern about violating the Health Insurance Portability and Accountability Act and won’t even share it in aggregate form.
Employers that are fed up with rising insurance costs for their employees and family members have increasingly decided to ditch the annual increases from insurance carriers and self-fund the benefits with the help of stop-loss insurance, third-party administrators, consultants and other specialists. In some cases, they also turn to insurers for “administrative service only” contracts. The trend is finally trickling down market to smaller businesses that are the backbone of the U.S. economy.
The fact that none of the BUCAs or trade group that reps health insurance carriers, nor a leading health care analytics firm, would even comment for the story I wrote was very telling. It’s almost as if they simply decided not to defend an indefensible practice, or in the case of that analytics company, upset any of the insurers that hire their analysts.
It also reflects a critical moment in time for employers and their advisers about the current state of fully insured group health insurance relative to self insurance and alternative risk transfer arrangements such as medical captives.
The cost savings of the captive scheme I wrote about was pegged at 20% on average, which provides a double-digit advantage over traditional fixed cost health insurance for like-minded employers that band together to leverage their purchasing power and secure direct contracts with health care providers.
It certainly has the attention of industry leaders. I quoted the head of a key business coalition on health care issues who said “employers have a fiduciary responsibility to manage their plans effectively, and they can’t be handcuffed in doing so without appropriate and transparent access to the data.”
Another source of mine made a humorous analogy by suggesting sports fans have more information about their fantasy football team than business owners have about the health and welfare of their employee population.
Health insurance is complex enough to understand and manage, and it doesn’t need to be further complicated by industry power brokers that are too busy looking after their own interests to do right by their customers. Without hearing their side of the story, my only conclusion is that the nation’s leading health insurance carriers are placing their profits ahead of people.In fact, a former insurance broker who now heads a company that provides HR departments with inexpensive resources told me that “carriers don’t want to share usage data because it causes them to lose their profitable groups.”
Ironically, this is the same group that politically left-leaning critics described as benefiting from a wet kiss in the form of Obamacare, which gave them an opportunity to insure 46 million new customers rather than submit to deeper regulatory scrutiny about their business practices and pricing. Competition would take care of those concerns, at least in theory, and we all know how well that has worked out with several major insurers bailing out of federal and state-run health insurance exchanges amid steep costs for carriers and consumers alike.
What’s unfortunate is that lives actually hang in the balance over their collective decision not to be forthcoming about sharing meaningful health claims information. As someone who has written extensively over the past four years about the power and merits of self-insurance, I can only hope that more employers take this path in hopes of doing a better job at managing costs than health insurers that continue to operate without enough transparency.
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