Health Plans Aren’t Designed To Be Affordable And They Won’t Be Anytime Soon

Will the next open enrollment on the health insurance exchanges include alternatives to high deductible health plans (HDHPs)? Currently, HDHPs make up 60% to 80% of exchange plans. And according to a Health Affairs Health Policy Brief, nearly 90% of individuals on the public exchanges are enrolled in a high deductible health plan. And that’s not likely to change if group (employer-based) plans continue to adopt the high deductible health plan model.

Employers Reluctant to Throw Out High Deductible Health Plans

Health Insurers and brokers design health plans with employer costs in mind, not individual employees. That means they design plans that allow employers to pass along any cost for health insurance to employees. To let their employer clients know that they have factored in the bottom line, they trot out their displays showing what the
Employee Pays and the Employer Pays. Most workers receive an abridged version of these charts that typically only list what the Employee Pays. These employer-based plans then become the default plan health insurance companies and brokers sell to individuals.

Even with the negative publicity high deductible plans have received since the rollout of the exchanges, employers, health insurers and brokers have shown no desire to back away from this type of plan design. In fact, they seem to be doubling down on these plans by increasingly making them the only plan option available to employees. However, there is indication that employers realize that employees won’t be able to bear the movement from high deductible to very high deductible health plans that is already taking place.

Employers Are Slowly Starting To Tinker With High Deductible Health Plan Design

Although employers continue to use HDHPs in increasing numbers, they are looking for ways to make them more palatable to employees. One way they are doing this is to use value based insurance (health plan) design. With value based health plan design, a health plan may provide cash or premium reduction incentives to participants that get an annual check up. It may waive the deductible, coinsurance or copay amount for certain prescriptions drugs and other care that has proven to have high value. Low value services would have higher cost sharing.
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Top Health Insurers Are Changing The Way They Do Business And Employers Should Too


Health insurance companies are fresh out of ideas on how to save employers money. But saving employers money was never their primary purpose anyway. Their primary purpose is to maximize their own profits. So after teaching employers all of their best cost-shifting tricks over the last few decades, they are exploring other revenue-generating options.

Whats Going on With the Big Health Insurance Companies?

The rollout of Obamacare provided large health insurers with a glimpse of their future. This future includes greater competition and less bargaining power with providers. There are several telltale signs of these changes, but here are four that get my attention.
  • They no longer have the benefit of price secrecy as their competitors can now see how they price their products on federal and state exchanges
  • They are struggling to maintain their networks and bargaining position with medical providers and hospitals as these entities consolidate
  • They let private employee benefit consulting firms like Aon Hewitt, Towers Watson and Mercer take the lead in the private exchanges movement. I am not convinced their hearts are in it and believe the only reason they are creating their own exchanges is because their competitors are, and
  • They are looking more like IT companies than health insurers...
Now I know that health insurers need to rely on robust and sophisticated technology to perform everyday functions. And it is no surprise to anyone that they use technology to gain a competitive edge. It is also no surprise that they are using their IT know-how and storage capacity to create new lines of business. But they are also sitting on another IT cash cow and this is mostly thanks to their employer clients. That cash cow is googobs of data.
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