After spending much of the past 4 months on the road speaking at various conferences, one thing is clear - people are freaking about health care reform.   Not the fact that it is happening but that so many issues are unresolved and answers are unclear.  Many of the details are just not known yet and it is frustrating to everyone.  I am still waiting to hear the true meaning of "grandfathering"!!!!  What is it?

The main factor that hasn't been addressed with reform is the rising costs of health care and that is where the self insured industry can make the difference.  We need to begin innovating and collaborating now.  Let's face the fact that health care reform is here and take the lead in promoting cost savings that this industry desperately needs.

Recently, America's Health Insurance Plans (AHIP) stated that it fears that employer-sponsored self-funded plans will siphon off healthier, cheaper beneficiaries to create isolated, lower-risk pools, which an AHIP official said could force insurers to raise premiums as health reform moves the country toward more universal coverage.  Really?  Well, what is the true underlying cause of AHIP's statements?  This same official stated that self-funded plans threaten to deprive the insurance industry of healthy lives that support large risk pools.

Insurers are concerned about "adverse selection and ability of smaller and smaller firms to pull themselves out of the exchange and go into the business of self-funding - which would be very, very bad for the structure of the exchanges," said Scott Keefer, VP for policy development at AHIP. He was speaking on April 30 at a hearing sponsored by the Alliance for Health Reform in Washington, D.C.

Self-funded plans may also pull themselves out of the pool because that way they can avoid state taxes on health insurance premiums, Keefer said.  He also said the following:

1. Smaller and smaller firms might choose self-funding, because incentives to self-fund are stronger under reform

2. Whereas previously, the threshold for self-funding may have been groups of 500 or more, after reform that threshold may decrease to 300 or less for young, healthy groups.

3. Self-funding employers are able to get the job done cheaper than insured plans because they can tailor plan design, have lower administrative costs, do not operate for a profit and have access to claims data, which insurers often refuse to share.

We need to take advantage of all of this.  The rivalry of insured versus self-insured has been around for years but the danger is that reform will persuade all kinds of companies to move away from employer-based coverage.

HHS will be doing an annual study on impact of exchanges on market dynamics, adverse selection and self funding.  By April 1, 2011, HHS will report on whether self-insurance is more affordable than insured coverage.  In addition, HHS will review the likelihood of self-insured plans not being able to pay obligations or becoming financially insolvent; and the extent to which rating rules are likely to cause adverse selection in the large group market or to encourage small and mid-size employers to self-insure.

I think it's pretty curious that AHIP was responsible for this inclusion in the rules!!!!  What do all of you think?  Do you agree with my conspiracy theories?

 

Adam Russo

The Phia Group