Who is really responsible for the health care costs in this country? We have been conditioned to point the finger at Government, Private Insurance Carriers, or Medical Providers. We have heard the endless barrage of blame, the assault of accusation, and the fury of fault-finding between these parties for many months now. Each would have us believe that the others are solely responsible for the problems in our health care system. Without question, however, there is shared blame and joint accountability. In addition to the government, the large insurance carriers, and medical providers I would suggest three additional parties with culpability:
1) health insurance brokers
2) employers and
3) you and I individually.
There has been and will be plenty more said of the role that the first three parties have had in creating the current situation. My intent in this 3-part series is to expose the role of the latter three groups and suggest how these groups can actually become part of the solution.
Health Insurance Brokers
To include brokers in this discussion may seem self-incriminating since that is my profession. However, I do so with a clear conscience because of the approach that my company takes when representing our clients. Just last week I was discussing trends of High Deductible Health Plans with one of our local insurance carrier reps. She told me that she had recently heard a broker tell her, “I will not sell that product to one of my clients.” The broker who made this comment was referring to a High Deductible Health Plan paired with an HSA and the comment was made in context of his commission. The carrier rep. was astounded that the broker would confess to not showing a certain plan to his clients because of the impact it would have on his commission.
Utilization of a High Deductible Health Plan (HDHP) strategy will generate a substantial and immediate reduction in premiums – typically between 30 and 50%. You guessed it. The reduction in premiums means a corresponding reduction in commission for the broker. How many brokers are honest and ethical enough to suggest a strategy to their client that will result in a sizable pay cut for them? Unfortunately, that is the way the system is designed and it creates an inherent conflict of interest unless the brokerage firm is built on another model. A model that measures success based on savings achieved for their clients. Under this model, the broker will always look first to take advantage of the savings created by High Deductible Health plans when building a proposal rather than looking at them as a last resort or only if the client asks about these plans.
The government has actually provided some very good options for employer-sponsored health care plans. Flexible Spending Accounts (FSA’s), Health Savings Accounts (HSA’s) and Health Reimbursement Arrangements (HRA’s) offer different ways to achieve premium savings and tax savings. If properly designed, these tax-favored plans can result in equal or better coverage for the employees at a lower cost to the employer. A properly designed plan that accomplishes these win/win outcomes must be done by a broker that specializes in the design and administration of these plans, not a broker that merely suggests them as an afterthought or upon request by the client.
From the 2009 Kaiser/HRET Survey of Employer -Sponsored Health Benefits report, we gain insight into why employers have adopted HDHP’s and what the outcomes have been:
- 72% of firms offering a HDHP said the primary reason they began offering this option was to save on health care costs
- 49% of firms offering a HDHP reported that the most successful outcome has been the control of health care costs
- An additional 27% reported that the most successful outcome has been the encouragement to employees to be better health care consumers (which, by the way, ultimately leads to lower health care costs)
- 82% of the employees enrolled in a HDHP reported being either very satisfied or somewhat satisfied with the plan while only 3% reported being very dissatisfied
Here are the surprising statistics:
- Only 5% of the firms not currently offering a HDHP reported that they are “very likely” to offer a HDHP with an HRA in the next year
- Only 6% of the firms not currently offering a HDHP reported that they are “very likely” to offer a HDHP with an HSA in the next year
(The Kaiser Family Foundation and HRET, 2009, p. 166-167)
Why are so few companies planning to start offering HDHP’s when the results have been so favorable for both employers and employees? Brokers have not done a good enough job of promoting these types of plans and educating their clients on the financial benefits of utilizing a HDHP. Whether due to lack of product knowledge or a desire to preserve their commission, there is fault with the brokerage industry for not being more aggressive with the positive health care reform that the government has already enacted. Brokers must be knowledgeable enough and ethical enough to recommend, design and implement these plans to benefit their clients. Employers need to find a broker who is knowledgeable and ethical enough to recommend, design and implement these plans for their company.
The Kaiser Family Foundation and Health Research & Educational Trust (2009). Employer Health Benefits 2009 Annual Survey (Electronic Version). 166-167.