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Health reform not as predicted: How self-insured health plans can sustain coverage

May 15, 2023

How employer-sponsored plans are responding
Migration of employer-sponsored plans to self-insure coverage, “done right”: Health Reform did prompt many employers to self-insure their coverage to avoid certain insurance taxes, state benefit mandates, insurer profit margins and the other requirements typically part of traditional, fully insured plans. Self-insured coverage also offers a greater level of flexibility – employers can tailor the plan to meet their employees’ needs. Self-insured plans can also benefit from the most effective cost management strategies such as direct contracting, price transparency through reference-based pricing, and effectively designed HSA-capable coverage.

Direct contracting presents a cost containment opportunity: Self-funded employer-sponsored health plans are discovering that “going direct” lowers costs by eliminating the “middleman.” Superior results are achievable via a direct contracting arrangement where the plan sponsor and the health provider align their respective business interests by aligning their respective economic interests.

Adopting “pure” reference-based pricing: Adoption of a “pure” reference-based pricing (RBP) plan design enhances price transparency. A “pure” RBP structure, coupled with tech-driven data support, may avoid unreasonable or excessive provider charges – lowering both the cost of coverage and employee-paid out-of-pocket costs.

“Health and wealth” strategy via health savings accounts: HSAs offer a strategic option to alleviate “financial fragility”. HSA assets receive America’s most valuable benefits tax preference since contributions are pre-tax for federal income tax purposes, as well as most state income taxes FICA (Social Security) and FICA-MED (Medicare). Earnings accumulate tax deferred and payouts for eligible medical expenses that are tax free. Tax-preferred HSA assets are capable of “Quadruple Duty” – covering out-of-pocket costs in current and future years and Medicare premiums, while also providing for retirement income and survivor benefits.

With the right planning, preparation and plan design, employers can ensure their health plans are adequately covered and their employees can receive the accessible and affordable healthcare they need.

Harnessing technology and powerful data
A quality health plan should provide easy, direct access and understanding of pricing, benefits and out-of-pocket expense information so plan participants can make informed and cost-effective decisions. Valuable data insights are gained through innovative software and tech-driven data analysis solutions. Employers should evaluate the data they receive from the health plan, including claims data and utilization reports, to better understand which services are being used, which providers are most cost-effective, and where savings can be identified and realized.

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