Years ago, health care consisted of natural remedies and homemade elixirs. It was only the most serious of conditions that caused people to seek out a physician, and payment was normally a barter arrangement. Families would offer up their most prized hen or invite the good doctor to a home-cooked meal.
Health care certainly has come a long way.
In the 1920s, the first large health insurance plan was established by Blue Cross. After that, more and more insurance companies began emerging to offer multiple plan designs. Also around this time, employers and union groups began purchasing health insurance for their workers. The health care system continued to grow and develop through the 21st century.
All of this led to one of the most complex health care bills to date: On March 23, 2010, the Patient Protection and Affordable Care Act was signed into law.
Prior to reform, employers were already getting creative with their plans in an effort to save money. Every renewal brought stress and the expectation of high rate increases.
In years past, it was common for employees to enjoy rich benefit plans and contribute little or nothing toward the premium. As premiums continued to climb, employers began looking at alternative solutions; this included altering their plan designs and increasing premium sharing. They began offering plans with higher deductibles and higher co-pays, and they considered co-insurance.
New concepts started coming into play such as health reimbursement accounts (HRAs) and health savings accounts (HSAs). More large employers began looking to self-funding as a way to control their dollars.
We started seeing health care consortiums and captive programs popping up. These arrangements allowed employers to come together and leverage their cumulative employee count for purchasing power and rate negotiations on stop-loss coverage with carriers.
Employers were beginning to take charge of their dollars. These programs allow employers to gently push their employees to become more consumer savvy by customizing their own plan designs. For example, they could increase ER co-pays and decrease those of an urgent care facility; they could drive up prescription costs for brand name medications and drastically reduce generic co-pays. Employees soon realize that they, too, can save by making smarter choices.
If nothing else, reform has created the need for even more ideas on helping employers save premiums. Insurance companies have developed defined-contribution plans, which allow employers to contribute specific dollar amounts toward health care, rather than a percent of overall premium. These arrangements provide multiple plan choices to the employees and they, in turn, get to make their own decisions on which plans will work best for them and their families. They understand that by selecting a plan rich in benefits, it will be more money out of their own pockets. We have seen self-insured plans now being offered to smaller businesses, whereas historically these were reserved for large-employer groups.
Many employers have also begun to implement wellness programs. Some are very simple and some are very involved — from offering smoking cessation programs and gym discounts to having wellness coaches come in to do blood pressure readings, do BMI (body mass index) reports and work directly with employees on diet plans. Smoking will become a big target as we move forward with reform since that — along with age, family size and geography (ZIP code) — will be how insurance rates will be determined. Medical underwriting becomes a thing of the past.
Physicians, hospitals and other health care providers are now incentivized to work together with insurance carriers, forming what's known as accountable care organizations. The intent of these organizations is to provide a higher level of quality care while offering patients reduced out-of-pocket expenses. Claims will begin to be expedited thanks to physician offices using a standardized billing system. And the sharing of patient information electronically through a confidential secure process will allow any physician immediate access to patient records, resulting in faster treatment plans, reduced medical errors and cut administrative costs.
Finally, the invention of the federally facilitated marketplaces (which are scheduled to open Oct. 1) will provide additional options for individuals and small groups (those with 50 or fewer full-time eligible employees). The initial enrollment period for the marketplaces will run through March 31, 2014. The marketplace will provide individuals an opportunity to apply for premium subsidy based on their household income levels.
If all else fails, we can always start looking at those old home remedies and elixirs Grandma used to dole out. And who knows, we might end up inviting the good doctor to dinner.
Tammy Shatto-Thomas is an account executive at Gunn Mowery.