Paul Ryan and the Republicans in the House have taken a beating in the media for their impotent Affordable Care Act (aka Obamacare) alternative plan. The criticism is warranted. After so many years of promising to produce an alternative to Obamacare, the best the Republicans can provide is an outline of a policy. Yet there is learn a lot we can learn from Ryan’s proposal. We can learn about Ryan’s personal views on life and health.

Paul Ryan’s Obamacare alternative was written from the perspective of a healthy and fit person who expects to stay that way.

• If you are really sick and traditional health insurance companies don’t want to insure you, Ryan’s sympathy is with the health insurer.
• If you have a serious health condition requiring lots of medical care, healthy people should not have to subsidize your health care expenses. You should be forced to maintain continuous coverage, at a higher rate, pooled with other seriously ill people.
• If you are currently active and healthy, you should have a policy tailored to your individual health. If you want a skimpy health plan, you can have it.
• If you are currently healthy, you should receive tax credits (or portable payments) that you can save until you need it or use it to pay for dental or vision care.
• If you can afford to set aside thousands of dollars to pay your medical expenses, you should be able to do so with tax-free dollars in a Health Savings Account.

Tags: obamacare alternative, obamacare

Some employers readily provide free health insurance to their employees. Some engage in “tough” negotiations or use innovative financing techniques to gain temporary health insurance savings. However, most employers simply accept annual health insurance cost increases that they then shift to workers. Workers have no control over how their employers manage health insurance costs. Or do they…?

What Could Happen

When the Affordable Care Act (aka Obamacare) became law, its supporters and opponents anticipated the end of workplace health insurance. So far both are wrong... Now there is a new theory cropping up about the impending demise of workplace health insurance. The theory is that employers are doing such a poor job of managing health insurance costs that they are neglecting their fiduciary duty and opening themselves up to potential lawsuits.

This is an intriguing theory and it is not surprising that it is now getting attention. Employees have filed numerous lawsuits over 401(k) retirement plan fees, so suits over high deductible health plans must be the logical next step. Right? Also, the Department of Labor’s new retirement account fiduciary standards requiring brokers to make recommendations that are in the best interest of their clients could easily be extended to health insurance brokers. Right?

It’s not like employees haven’t sued insurers and employers before over health care related issues. Employers have been sued for:

• denying coverage for specific medical care procedures or inadequate health care (e.g., Wal-Mart)
• firing older workers for potentially having higher health insurance costs
• firing workers with high medical expenses

Tags: obamacare, Fiduciary rule

Benefit brokers are familiar with managing the “do we really need you” attitude of their clients. They devote a lot of time and energy proving they bring value to their clients that they could not get without them. And many of them do. They help clients choose insurance, retirement savings and other risk management products. Some are able to do this and save the client money even after factoring in their own fee…

Still many people begrudge brokers for receiving the type and amount of compensation they receive. They agree to the fee because it seems like such a small part of a much bigger transaction and they understand that that’s the way these transactions are done. However, thoughts about what brokers do and how well they do it to earn their commission linger.

These persistent thoughts about broker compensation came to the surface first with the health care reform law, then with retirement plan transparency regulation and later with the fiduciary rule.

Out In The Open At Last

With health care reform, brokers didn’t wait to be noticed. They moved from the middle to the front to express their concerns about navigators assuming their role, health insurance companies eliminating their commissions and regulators ignoring their existence. They felt disrespected and expressed their resentment in both negative and positive ways. Some brokers left the industry; others narrowed their focus and a few created profitable and disruptive niches that got a lot of attention. Too much attention… That was the case with Zenefits.

Zenefits is a technology company that provides software companies use to manage Human Resource administrative functions like benefit plan enrollments and changes, time and attendance tracking and ACA compliance. Zenefits is also a health insurance broker. In 2015, Zenefits, the brokerage, ran into regulatory trouble when it was revealed that it allowed unlicensed brokers to sell health insurance policies. It’s CEO and 250 employees were fired in early 2016. This week Zenefits is getting some more unwanted attention—it’s firing 106 more employees and encouraging others to leave and accept a severance package.

While the Zenefits health insurance broker story is interesting, it can’t compare to the drama happening in the retirement services sphere.

Retirement Plan Fees and Investment Performance In the Spotlight Continue Reading...

Tags: retirement fees, retirement accounts

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. Continue Reading...

Tags: HIgh deductible health plans, Exchanges

When you favor public solutions to important, yet costly universal needs, you are immediately labeled a socialist. To avoid this label, you have to ignore the shortcomings and outright failure of the private sector’s handling of important “commodities” like health insurance, health care and retirement savings? Who could say with a straight face that before the Affordable Care Act, health insurance was easy to get for everyone? Or that before the Department of Labor’s fee transparency requirements, the retirement services sector was working hard to make sure plan participants knew they were paying any fees at all?

I get it. We are not a country that likes everyone getting a highly sought after good. Someone has to get it and someone has to not get it so that we know we worked harder or are just better or more deserving than the other person. But when we think like this, we let a small, privileged group of people reap huge rewards they didn’t earn. A group that understands our warped psychology and uses that knowledge to line their pockets...

Of course, the retirement and financial services industries are not the only sectors that take advantage of a status-focused and misinformed public. Nor does everyone in the industry engage in this kind of behavior. But lately I’ve been obsessed with just these guys. I’ve been reading a lot about financial fraud, including insider trading and the CalPERS bribery scandal, and the amount of money some people make cheating the system has led to my of course they are stealing from our retirement savings attitude. By stealing I mean overcharging for the services they provide and making backroom deals for their own benefit. Again, not all of them, but enough that we should rethink our preference for the private sector’s high-costs, high risks retirement savings model. Continue Reading...

Tags: retirement plans, retirement plan fees, Social Security