The new Health Care Reform Act will cause many employers to lose Their Grandfathered status on their old medical plans. How?
Because under guidance released in June 2010 the Federal Government has stated if the employer raises his deductibles, co-pays, or even his premiums that the employee has to pay; then the employer could lose the Grandfathered Status. That means that the employer will be subject immediately to all the new regulations and plan features of ObamaCare.
So what can an employer do about it? He can explore two options so that he can make the best informed decisions if he is going to lose Grandfathered Status:
a. He can look at Pricing Transparency and
b. He can either partial or fully Self fund his medical plan.
Do not expect your broker, insurance carrier, or even your consultant to suggest these two options.
But we honestly feel that employers and employees will need to lead the way. Yet some employers and most employees feel differently. We have the distinct feeling that some Employers don’t want to face reality that they will have to do some “heavy lifting”. ObamaCare will now force many employers to face that reality.
A survey done by United Benefit Advisors (UBA), showed three clear and remarkable findings:” First, only 22% of employers believe the primary responsibility for controlling healthcare costs reside with the parties directly involved: the employees, the physicians, and the hospitals. Almost all responsibility has been ceded to intermediaries: insurers/health plans, government, and employers.
Second, an overwhelming majority of employers believe the federal government has a definite role to play regarding health care: that of requiring all hospitals, physicians, and insurers/health plans to publicly disclose all cost and quality information.
Employers desire access to the cost and quality information that both employers and employees need and deserve in order to make informed health care purchasing decisions in advance of receiving care. Both the employer and the employees have to be allowed to purchase health care the same way they purchase a home, a car, or any other goods or services.
Third, employers predict two significant changes to the health care system in the next five years:
- All hospitals, physicians, and insurers will be required to publicly disclose all cost and quality information in advance of purchasing care or purchasing insurance.
- Employers will increasingly adopt a "total compensation" approach whereby employees will receive a single compensation amount over which they will have total control to allocate their money toward take-home pay, health benefits, retirement or savings plans, or non-health benefits in the manner they feel appropriate to their needs.
The results of the survey indicate that nearly all employers, regardless of size or industry, are determined to change the way employers and employees purchase health care. Soon there will be no more intermediaries. Employees want and deserve control over how their money is allocated and which providers they use for care.”- UBA website
Many employers will then look at partial or full self funding and adding a Health Reimbursement Arrangement (HRA under Section 105) to help them control costs.
It is obvious that the employee/consumer is slowly becoming better educated and interested in controlling his/her own healthcare. For instance, Blue Cross Blue Shield in a 2005 Survey stated that 60% of Americans have looked up information to make a better informed medical treatment decision. 94% who have not searched said they would if they or other family members needed medical care. 80% say they still talk to their primary medical provider but in addition 70% say they use the Internet as their basic research tool.
To make my argument even stronger I am going to refer to several surveys. One is done by the Council for Affordable Health Insurance (CAHI) and was released recently. According to the survey Americans are ready to become health care consumers, if given the tools to do so.
Zogby International surveyed the public's attitude about the need for pricing disclosure in the health care system, and whether consumers would take advantage of that information. The nationwide poll of 1,209 interviews asked: "Do you agree or disagree that hospitals, doctors, and pharmacies should publish their prices for all goods and services?" Fully 84 percent agreed, with only 14 percent disagreeing. The survey also asked: "If you knew the prices a hospital, doctor, or pharmacy charges, how likely would you be to shop around for the best price?" According to the survey, a total of 79 percent said they would be likely to shop for the best price (51 percent "very likely" and 28 percent "somewhat likely").
Today Americans are used to seeing and comparing prices. The question is why would health care be an exception to the rule? The answer is that it probably wouldn’t be. People want to know how much it costs if they are paying for it. The transition to a consumer driven health care society is imminent. The consumers know it. Do the health care providers know it too?
The poll also found that: "Among those most likely to say they would shop around for the best price are Hispanics (89 percent), 20- to 34-year-olds (88 percent), and those earning between $25,000 and $35,000 a year (84 percent)."
For the full report from Zogby International, go to http://www.cahi.org .
Solution- the best way to control healthcare costs is to have more information.
Where can consumers find this type of information including prices of health care services? Atwww.HealthGrades.com you can order pricing information on 42 medical procedures Performed most often. It costs $7.95 per procedure:
In the survey already mentioned above by United Benefit Advisors (UBA), (http://benefits.com ) we can find the following:
"An astounding 99% of all employers consider both company health costs and the impact of higher costs on employees either a critical or significant concern," said David LoCascio, UBA's Co-Founder. "This level of concern following the lower, although still significant cost increases of the past two years implies little faith by employers that a real solution to the underlying drivers of healthcare costs has been found or implemented."
Summary- If I were in the Administration business for partial or self funding; I would be aggressively expanding my business and offering to do a free Cost-Benefit Analysis for Any employer. And I would be promoting total Price Transparency so that employers can make better decisions.
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