Beyond Traditional Group Insurance – Personal Ownership

What Benefits Advisors Need to Know About the Value of Personal Ownership

For the past 50 years, the most radical transformation in health benefits was the mainstreaming of the Managed Care movement in the early 1990’s. During those years, medical inflation flattened and even turned negative early on.

That movement also helped raise awareness and then increase quality while containing costs. But it set an unachievable expectation that medical inflation would be a thing of the past, especially for employer sponsored benefits.

Now 25 years later, health care inflation is roaring back as a strong economy replaces the slump of 2008. The recently released Kaiser Family Foundation Survey of Employers reports that family health benefits for larger employers is increasing at an annual clip of nearly $650 per worker for each of the last 3 years. Once again, this is one of the most out of control costs for employers.

… a whole new model and approach is critical to American employers and workers. Companies like Hixme are part of a new movement that replaces the grueling traditional benefits treadmill, reducing real costs and improving workers’ benefits at the same time, despite overwhelming external dynamics.

Unfortunately, solutions from fatigued benefit advisors after all these years have proven to be reactive, often short sighted and sometimes contradictory. It’s easy for an advisor to conclude that there just aren’t any more rabbits to pull out of the hat. So employers are left with these choices:

• Pass more of the price increase on to workers and especially their dependents, 78% of whom are living paycheck to paycheck, according to a 2017 Careerbuilder Survey.
• Increase co-payment and deductible amounts despite workers in a 2016 SHRM study showing a reduction in worker satisfaction from 74% to 66% between 2012 and 2015.
• Impose plans with narrower or closed networks (HMO’s, EPO’s) where higher cost “branded” providers may not participate. This interesting action recognizes that over 75% of working Americans will have infrequent, routine or minimal need for healthcare services in the entire year. So the emerging “high performance” or “narrow networks” can produce real value tradeoffs for the vast majority of workers.
• Allow for pre-tax money to be available only if needed through emerging Savings and Reimbursement accounts reflecting SHRM’s findings that workers in 2015 value cash over health benefits at twice the rate it was in just 2012.
• Struggle with more choice, available through the 1st generation of private exchanges, which run the risk of higher cost and complex pooling and selection challenges for all but the very largest employers.

It should not be surprising to advisors that employers need new models, since the underlying traditional employer group model is just too restrictive to meet the expanding demands of employers and their workers. Traditional limitations include:

• One-size MUST fit all — Limits workers and family members to carriers and plans chosen by their employer.
• Self-funding pitfalls, including increasingly restrictive and costly stop loss insurance.
• Rigid requirements for worker participation and contributions in an ecosystem where many other options exist for low-income workers and all their dependents.
• Costly and time-consuming annual redesign of benefits that makes standardization, automation and mobilization difficult.
• Rate shocks and surprises in subsequent years due to adverse claims in a challenging year.

The personal ownership solution

Given these factors, a whole new model and approach is critical to American employers and workers. Companies like Hixme are part of a new movement that replaces the grueling traditional benefits treadmill, reducing real costs and improving workers’ benefits at the same time, despite overwhelming external dynamics. In this new and emerging hybrid category, companies such as Hixme are emerging. As an insurtech/fintech hybrid, Hixme offers a core health plan with a series of innovative safety nets through a technology enabled platform we call the hixme.comhixme.com The result? Large employers provide their workers a true personal ownership solution that is largely employer funded. Backed by algorithms that consider each family member’s needs and preferences, workers see a comparison of multiple coverage options and costs. They are empowered to select the Right-Fitting Coverage for each family member structured within a partially self-funded, ERISA Compliant, Group Health Plan.

ABOUT THE HIXME THINK BLOG: Authored by one of the health insurance guru’s Denny Weinberg, postings reflect market trends and the powerful emerging movement toward true portability and personal ownership by workers and their families. These postings will follow emerging goals and actions of the Trump Administration, and the US Departments of HHS, Labor and Treasury, and also gridlock in the new Congress.