ANAHEIM, Calif.-Health insurance has been regarded by most American companies as a standard employee benefit since World War II, but that is changing.
Mike Evert, employee benefits product manager for CUNA Mutual Group, and David Martin, managing principal, CU services for Digital Benefit Advisors, said consumer-driven healthcare plans are growing significantly more popular. A CDHP is a health insurance plan with lower premiums and features higher deductibles and coinsurance than traditional health plans.
"We must regain control over the system itself," Martin told attendees of the CUNA HR/TD Council's conference here. "The market is moving toward CDHPs. In 2011, 17% of American employees were enrolled in consumer-driven healthcare plans. They result in increased out-of-pocket expenses for consumers."
CUNA Mutual Group and Digital Benefit Advisors are working together to provide compliance resources, expertise to help credit unions navigate the complexities of the Affordable Care Act.
Evert said a review of the history of health insurance shows the industry has come full circle. Prior to 1920 most people had no health insurance, he pointed out. In 1929 the Baylor Hospital Health System set up the first insurance organization, followed shortly by Kaiser Permanente-both were chartered as charitable organizations.
"During World War II health insurance was used to attract employees," he said. "The Stabilization Act of 1942 exempted from taxation the cost employers pay for benefits."
In 1970, per capita spending on healthcare was $356, Evert continued. By 2010, that figure had ballooned to $8,402. "Today, 50 million Americans have no health insurance," he said. "Only 59% of small employers offer health insurance. Average out of pocket healthcare costs for households is $5,091."
A Move in the Market
Evert said hospitals are getting into the insurance business and predicted a shift toward defined contribution plans, private exchanges, a public marketplace for insurance, expansion of Medicaid, and multiple employer welfare arrangements.
Added Martin: "We will see a move beyond 'wellness.' Wellness is overrated. Employees need to be more engaged in their health. Companies need to manage absenteeism and presenteeism, making for greater personal accountability. And of course there will be increased regulatory oversight."
According to Evert, having hospitals in the insurance business eliminates the middleman and shares the risk.
Any talk of benefit changes is inextricably linked to the Affordable Care Act, the healthcare reform law that was signed in March 2010 (see related story). Evert and Martin noted many employers are shifting from paying the premiums for their employees' health insurance to defined contribution health plans, also known as DCHC, in which the employer allocates a fixed dollar value.
"A pension is a defined benefit, while a 401(k) is a defined contribution," Martin explained. "The needs of a 26-year-old single guy are very different from a 26-year-old married guy with two kids. With a defined contribution health plan, those two people can choose how they spend their healthcare dollars."
'Clear As Mud'
As a result, Martin continued, there will be more personal accountability. "People will have to become educated healthcare consumers," he said. "With more skin in the game, they will want to know an MRI can be $2,000 at one location, but $200 down the street."
Evert said it is important for HR specialists to understand the Affordable Care Act. "With reform there will be increased regulatory oversight," he said. "There will be an increased emphasis on outcomes. There also will be ongoing healthcare reform, and there will be changes. Explore alternative funding of healthcare and know there are going to be significant rate adjustments coming right around the corner."
Martin said no one knows for certain what will happen, the best option is to look at the past and try to predict the future.
"It is clear as mud," he quipped. "There is going to be pain before it gets better. There will be trial and error. HR people and CUs have to make more out of less."
