In the past three days, I’ve spoken with 12 insurance brokers and benefits consultants from all over the country – Chicago, New York, Houston, Dallas and Austin, Texas. Why? To get their feedback on 2017 and how it relates to YOU, the employee benefits professional. Here’s what they had to say:
Fully-Insured Renewals Have Been High
- The Affordable Care Act Tax of 2.7 percent on fully-insured plans goes into effect in 2018 for the first time. See Oliver Wyman’s article to learn more.
- Medical trend for many major insurance carriers has jumped from 7 percent to nearly 10 percent in recent years.
That’s almost a 6 percentage point increase in renewals this year, apart from a group’s own change in claims experience, if they are credible.
Sale of Worksite Products is Increasing
Worksite products include accident insurance, critical illness insurance and cancer insurance. Employees are purchasing more of this type of insurance, where the cost of the insurance premium is paid by the employee… and not by the employer.
Cost Continues to be the Greatest Challenge for Employers – But What to Do About It?
Brokers and consultants are inundated with cost-containment solutions from vendors and the insurance carriers themselves. These include: Wellness. Telemedicine. Advocacy. Navigation. Second opinion services. Surgical Networks. Benefits hubs. Enrollment systems.
Responses from brokers, consultants and employers tend to be the same: Dizzying, overwhelming and too many emails from too many vendors.
A Lot of Talk about Shared Savings and Reference-Based Pricing
There is a lot of buzz around giving employees money back if they go to a lower cost facility for healthcare services (e.g. it costs $400 to have an MRI performed at an imaging facility vs. $2,400 to have an MRI performed at the hospital). These shared savings programs can be offered by the insurance carriers themselves or vendors. However, it’s mostly talk and no action. Employers aren’t actually doing it.
There is also a lot of buzz about reference-based pricing, where the employer drops their insurance network and uses a third-party administrator (TPA) to reimburse about 120 percent of Medicare reimbursement for a service. For example, the in-network allowed amount for that same MRI listed above may be $2,400, but Medicare only pays $240 for the MRI. Therefore, the employer’s TPA will only pay the hospital $288 (Medicare x 120 percent). If the hospital balance bills the member, then the reference-based pricing program either fights those charges on behalf of the member or the member must pay the difference out-of-pocket.
Again, mostly talk and no action. Employers aren’t actually doing it.
This is not to say they will not become viable approaches in the future. They just aren’t significantly implemented strategies in 2017 or 2018.
Using Compass Reduces Health Plan Costs
To see how brokers, consultants and employers are using Compass to lower health plan costs, visit www.compassphs.com.