New option for small employers could produce savings

UnitedHealthcare announced this fall the launch of a new group health plan option for small employers in Tennessee.

The carrier’s ‘All Savers’ product is a Dividend-Eligible health plan. Sometimes called a ‘level-funded’ health plan, this self-funded strategy allows employers to have more transparency into where their claims dollars are spent and access to savings in low-claim years.

This product has been available in other UnitedHealthcare markets for years, beginning with a 2013 launch in Colorado. The launch in Tennessee demonstrates the success of this strategy in the small employer market.

All Savers is available for groups of five to 100 eligible employees. But how does a Dividend-Eligible plan work?

Costs outpace wages, inflation

Annual family premiums for employer-sponsored health insurance rose five percent to $19,616 in 2018, according to the Kaiser Family Foundation Employer Health Benefits Survey.

On average, workers are paying $5,547 toward the cost of family coverage, with employers picking up the rest of the tab. Annual premiums for single coverage increased 3 percent this year, to $6,896, with workers paying an average of $1,186.

The data confirms what most employers already know — that group health plan costs are increasingly taking up bigger and bigger portions of company budgets.

Three ways to lower claim costs

As healthcare prices continue to rise, most employers would like to have more control over their group health plan and its costs. However, this requires better visibility into medical claims incurred by employees, and fully-insured plans typically provide almost no transparency into where the employer’s dollars are going.

Alternatively, self-funded plans give employers better insight and control over their claims spend. As a result, self-insuring is becoming a more attractive options for groups of all sizes, especially as fully-insured rates continue to rise at unsustainable levels for small and mid-sized businesses.

There are three main ways to reduce claims spend.

New option could produce premium savings for some groups

UnitedHealthcare announced this week the launch of a state-wide geographically-based Association Health Plan (AHP) for small employer groups in Texas.

This new United product provides another option for Texas employers with 2 to 50 employees. For up to half of small employers in the Texas market, the AHP option could potentially produce premium savings of 5 percent to 15 percent, as compared to traditional, fully-insured small group rates.

The new option takes advantage of the executive order to expand AHPs from the Trump Administration. In the past, employers could only band together to offer health coverage if the association was trade-based. Now employers in a shared geographic area can also take advantage of economies of scale. (More: What employers need to know about the new Association Health Plan regulations)

Study puts blame on hospital markups

Who is responsible for high healthcare costs, and high pharmaceutical costs in particular? The back and forth between drug makers, providers and insurers on this issue continues, with a new study laying the blame for high drug prices on hospital markups.

The new study, commissioned by Pharmaceutical Research and Manufacturers of America reports that nearly one in five hospitals markup drugs up to 700 percent or more. The study compared 3,792 hospitals and data from the Centers of Medicare and Medicaid Services.

The study notes that drug price markups often lead to higher reimbursements from health plans. Higher claim rates can often result in big premium increases for employers, and these costs are often then further passed on to employees.

Of course, hospitals are not the only source of prescription drugs for employees, and efforts to address skyrocketing drug prices will have to address inflation across the delivery system, including drug makers and prescription benefit managers.

However, self-funded employers may want to pay particular attention to hospital markups. In a self-funded plan, employers are responsible for paying claims up to a stop-loss threshold, and so prescription spending in the hospital setting can be a cost driver. Here are three tips for reducing prescription spend at hospitals for self-funded groups:

Out-of-network claims increase cost pressure on employers

A new study released by the Kaiser Family Foundation reports that nearly one in five inpatient admissions includes a claim from an out-of-network provider, putting additional cost pressures on employees and employers.

Even when patients use in-network facilities, 15 percent of admissions included a claim from a non-network provider.

While a few states have passed legislation around balance billing and the use of out-of-network providers in in-network facilities, most have not, which means employees nationwide are at risk for surprise bills.

Here are three tips for employers for reducing out-of-network claims

An alternative healthcare financing option for small employers who’ve historically been fully-insured

Most employers have more choices than they realize when it comes to financing their group health plan. Purchasing a fully-insured health plan may be the traditional route for groups with under 50 employees, but to get out of the status quo of premium increases, employers who are frustrated with rising costs may have to change how they look at their health plan and how it's financed. There is a continuum of funding options available to employers, beginning with the traditional, fully-insured health plan, with steps groups of all sizes can take toward self-funding. (More: The Employer's Guide to Self-Insuring)

For groups under 50, one of these options is known as a “Dividend-Eligible” strategy, or sometimes called a “level-funded” health plan.

How employers can help

A majority of Americans have received a surprise medical bill in the last year, and a new study provides some insight into how consumers feel about medical billing — and where they place the blame for unexpected costs.

According to the study, published by research organization NORC at the University of Chicago, the majority of respondents named insurance companies as very responsible for surprise billing, followed next by hospitals. Most of the surprise charges were for a physician’s service, followed by lab tests.

The study illustrates that despite years of conversations around price transparency and consumer-directed healthcare, the industry is still struggling to effectively educate employees about their benefits and care costs.

What employers can do

A new study by Mercer found employers’ turnover rate dropped by a third when comparing companies doing the most to help employees thrive, versus those doing the least.

Employees stay longer when the culture of health is stronger, the study found. Further, employers engaging in more “wellbeing practices,” also bend the cost curve more substantially.

What are the well-being practices? The study broke them down into three categories, “basic,” “culture of health,” and “quality and value.” Here are a few of these solutions for cost containment and employee well-being.

What employers should know

Congress is working on a solution for paid parental leave, with options currently under consideration on both sides of the aisle.

Most recently, Sen. Marco Rubio released the “Economic Security Act for New Parents,” which would allow parents to withdraw early Social Security benefits to use after the birth or adoption of a child. Parents who took advantage of this bill would then delay the collection of those benefits in retirement