Archive for March, 2012

Solutions Needed to Thrive Within Healthcare Reform

March 12, 2012

First of all, thank you to the many respondents to our first Blog effort and to all of you who signed up for more. It is interesting to see so many interested in another point of view and it’s encouraging to hear that so many agree that there are opportunities ahead.

I want to address ERISA based small group medical solutions and the underwriting needed to thrive within healthcare reform (HCR). You have heard me say and read from our many articles that ERISA ,or rather E-based small group plans will provide brokers and employers many solutions as we approach HCR. But, we need to address underwriting too as we look to this approach. The more casual underwriting practices of the past 7 years bear much of the responsibility for our current HCR situation so to approach E-based solutions without analyzing these mistakes would be fool hearty.

Research and opinion support the notion that 50-70% of small employers, those with 15 to 99 employees, could benefit from a properly administered E-base solution for their group health plan. But, how does one determine which employer unit would benefit and which one would not. The answer begins with practical solution based underwriting. Not every employer will or should qualify for the new  E-based medical plan solutions. Groups with positive, supportive work environments and groups with worksite wellness or encouragement programs will benefit greatly from these new plans.

However, employers and brokers looking for low cost plans with no investment in its success will not find these E-based plans to be a suitable plan solution. Employers with a group history of shopping for the cheapest rate each renewal and not acknowledging characteristics within their own group will not find E-based plans to be a pricing panacea compared to the premium-based, guaranteed RAFs of the past 7 years.

Sound E-based plans will include a proper underwriting process to evaluate the appropriateness of the E-based setting for employers. Some employers will not find the results of this underwriting to be acceptable. Groups in this scenario may need to retain their fully insured traditional plan until efforts are made to alter the characteristics within the group. Real time goal oriented wellness and health encouragement plans may need to be employed to prepare these employers for the solutions available in the new E-based health plans of the future. We can address these ideas in future editions.

The casual premium-oriented underwriting of the past 7 years has led brokers and employers to be unprepared for the underwriting required, that is if employers want a chance to control their own plan destiny for benefits and premiums. It will take some effort to understand and promote the benefit of proper underwriting but the rewards from it will be worth the effort for every employer.

There are solutions available in the California market today that implement this strategy of proper underwriting and E-based solutions…so the future is now, as they say. Brokers should seek out TPAs and health plans willing to look beyond the next quick RAF fix to create a long term solution.

Remember, experts predict that  50-70% of the employers in the 15-99 market will qualify for these solutions and employers are definitely willing to make the effort needed to qualify;  if someone will just show them how. Don’t those employers deserve the chance to see what an E-based solution looks like for their own group?