Worrisome topic - Large Corporations are self insuring

L

LouLou

New member
I just read an article. <a href="http://www.businessweek.com/articles/2012-04-05/small-business-makes-a-risky-bet-on-health-care">http://www.businessweek.com/articles/2012-04-05/small-business-makes-a-risky-bet-on-health-care</a>
In a nutshell, 80% of companies with over 1,000 employees are taking on the risk of insurance themselves. So instead of paying premiums to a company like Aetna they are instead hiring Aetna (just using as an example of major medical provider) to manage their plan offerings and administration with doctors office, etc. and then when the bills come in instead of Aetna covering them, Aetna passes on the expense to the employer...at the Aetna rate. At least that's how I interpreted it. Many employers are using all the data they get regarding their employees medical expenses to tailor wellness plans. Sounds great right? Scary if you ask me. Makes you wonder if they are also targeting high cost employees. Turns out it's legal to do what is called "lasering" where a high risk employee pays more. Really?!
Okay so this has me concerned. For a while (well like since 2008 when I entered the 770 trials and heard the cost for such a drug would be A LOT) I have wondered but haven't said anything because I had hoped someone else would or maybe wouldn't but I can't keep it in any longer. I need your thoughts.
Everyone talks about about whether or not they think their insurance company will cover Kalydeco. But have you ever thought about possible job discrimination regarding the use of Kalydeco?
Imagine this scenerio. Employee Bob has annual family medical expenses of $100-200K a year. They are considered on the high risk with these sorts of numbers (in actuality I have no idea what the cut off is to be considered high risk). Then all of a sudden, Bob's family has annual medical expenses of $800K with no change expected since this new medication added to the mix is expected to be used forever...by two family members. The self insured company really starts to take a look at Bob....is he really THAT good? Is he worth 800,000 annually + his stock options, bonus, and salary?
What about smaller companies who self insure? How do they possibly cover the expense of Kalydeco year in and out for the forseeable future and warrant keeping that employee around?
Even before I read this article on self insured, I was worried what the effect would be of adding $600K medical expenses to my family's acct would mean.
Am I missing something here?
 
L

LouLou

New member
I just read an article. <a href="http://www.businessweek.com/articles/2012-04-05/small-business-makes-a-risky-bet-on-health-care">http://www.businessweek.com/articles/2012-04-05/small-business-makes-a-risky-bet-on-health-care</a>
In a nutshell, 80% of companies with over 1,000 employees are taking on the risk of insurance themselves. So instead of paying premiums to a company like Aetna they are instead hiring Aetna (just using as an example of major medical provider) to manage their plan offerings and administration with doctors office, etc. and then when the bills come in instead of Aetna covering them, Aetna passes on the expense to the employer...at the Aetna rate. At least that's how I interpreted it. Many employers are using all the data they get regarding their employees medical expenses to tailor wellness plans. Sounds great right? Scary if you ask me. Makes you wonder if they are also targeting high cost employees. Turns out it's legal to do what is called "lasering" where a high risk employee pays more. Really?!
Okay so this has me concerned. For a while (well like since 2008 when I entered the 770 trials and heard the cost for such a drug would be A LOT) I have wondered but haven't said anything because I had hoped someone else would or maybe wouldn't but I can't keep it in any longer. I need your thoughts.
Everyone talks about about whether or not they think their insurance company will cover Kalydeco. But have you ever thought about possible job discrimination regarding the use of Kalydeco?
Imagine this scenerio. Employee Bob has annual family medical expenses of $100-200K a year. They are considered on the high risk with these sorts of numbers (in actuality I have no idea what the cut off is to be considered high risk). Then all of a sudden, Bob's family has annual medical expenses of $800K with no change expected since this new medication added to the mix is expected to be used forever...by two family members. The self insured company really starts to take a look at Bob....is he really THAT good? Is he worth 800,000 annually + his stock options, bonus, and salary?
What about smaller companies who self insure? How do they possibly cover the expense of Kalydeco year in and out for the forseeable future and warrant keeping that employee around?
Even before I read this article on self insured, I was worried what the effect would be of adding $600K medical expenses to my family's acct would mean.
Am I missing something here?
 
D

DrRoe

Guest
Unfortunately LouLou you aren't missing anything.. (I teach courses in health admin and this is one topic we discuss). However, its important to realize that self-iinsured companies pay for the care of their employees via the premiums the employees pay. The larger the numbers insured by a company the easier it is for the company to spread out the cost so that it can keep premiums down. One employee taking Kalydeco in a self-insured company with 1000 employees would push up the premium by about $25 per month. This might not seem like a lot to us but to a healthy non-user of health care it might seem like a lot. Of course, the smaller the company (whether they are self-insured or not) the more impact a single high cost user has on the final premiums paid by everyone in that self-insured company. So in a company of 100 the premium costs could increase by $250 per month. Thus its in the best interest of the company and even its healthy employees to not hire, or keep employing, chronically ill, high cost employees...
The solution - universal health insurance, the problem it runs counter to some long held political beliefs AND it would negatively effect the bottom line of private insurance companies which are active contributors to political campaigns.
 
D

DrRoe

Guest
Unfortunately LouLou you aren't missing anything.. (I teach courses in health admin and this is one topic we discuss). However, its important to realize that self-iinsured companies pay for the care of their employees via the premiums the employees pay. The larger the numbers insured by a company the easier it is for the company to spread out the cost so that it can keep premiums down. One employee taking Kalydeco in a self-insured company with 1000 employees would push up the premium by about $25 per month. This might not seem like a lot to us but to a healthy non-user of health care it might seem like a lot. Of course, the smaller the company (whether they are self-insured or not) the more impact a single high cost user has on the final premiums paid by everyone in that self-insured company. So in a company of 100 the premium costs could increase by $250 per month. Thus its in the best interest of the company and even its healthy employees to not hire, or keep employing, chronically ill, high cost employees...
The solution - universal health insurance, the problem it runs counter to some long held political beliefs AND it would negatively effect the bottom line of private insurance companies which are active contributors to political campaigns.
 
S

shinkdew

New member
A lot of companies cap the amount they pay. For example, the company I work for has been self insured for years. They only pay the first $250,000 in expenses per employee, our health insurance company pays anything over that amount. I've never had a problem and I've worked there for six years.
 
S

shinkdew

New member
A lot of companies cap the amount they pay. For example, the company I work for has been self insured for years. They only pay the first $250,000 in expenses per employee, our health insurance company pays anything over that amount. I've never had a problem and I've worked there for six years.
 
B

BikerEd

Guest
Hmmm, if universal healthcare with a mandate is the answer then why are some people with medicade having a hard time getting plumo? Or the woman in Seattle where the military docs won't get her the meds. She needs
 
B

BikerEd

Guest
Hmmm, if universal healthcare with a mandate is the answer then why are some people with medicade having a hard time getting plumo? Or the woman in Seattle where the military docs won't get her the meds. She needs
 
H

hmw

New member
<div class="FTQUOTE"><begin quote><em>Originally posted by: <strong>DrRoe</strong></em> Unfortunately LouLou you aren't missing anything.. (I teach courses in health admin and this is one topic we discuss). However, its important to realize that self-iinsured companies pay for the care of their employees via the premiums the employees pay. The larger the numbers insured by a company the easier it is for the company to spread out the cost so that it can keep premiums down. One employee taking Kalydeco in a self-insured company with 1000 employees would push up the premium by about $25 per month. This might not seem like a lot to us but to a healthy non-user of health care it might seem like a lot. Of course, the smaller the company (whether they are self-insured or not) the more impact a single high cost user has on the final premiums paid by everyone in that self-insured company. So in a company of 100 the premium costs could increase by $250 per month. Thus its in the best interest of the company and even its healthy employees to not hire, or keep employing, chronically ill, high cost employees... The solution - universal health insurance, the problem it runs counter to some long held political beliefs AND it would negatively effect the bottom line of private insurance companies which are active contributors to political campaigns.</end quote>
I can definitely see how this happens. My husband used to work at a rather small company and some years our premiums jumped by HUGE amounts due to rather vaguely worded 'increased cost of maintaining benefits.' And yes, as a family who did not yet have sick family members and did not particularly understand every detail of how the medical 'system' worked- this was really upsetting, looking at the substantial chunk this took out of my husband's hard earned paycheck.

And n response to the original post~ At this point, before my husband had his current job my daughter was placed on government insurance (my dh was unemployed.) His company self insures in the manner you describe in your original post, Lauren, and for as long as Emily qualifies for her current insurance I feel I have no choice but to leave her on. I am fairly certain it would cost my husband his job if I didn't, and in any case we can't afford to find out for sure. He needs his job and works hard there as well as a second job. And she needs her insurance.
 
H

hmw

New member
<div class="FTQUOTE"><begin quote><em>Originally posted by: <strong>DrRoe</strong></em> Unfortunately LouLou you aren't missing anything.. (I teach courses in health admin and this is one topic we discuss). However, its important to realize that self-iinsured companies pay for the care of their employees via the premiums the employees pay. The larger the numbers insured by a company the easier it is for the company to spread out the cost so that it can keep premiums down. One employee taking Kalydeco in a self-insured company with 1000 employees would push up the premium by about $25 per month. This might not seem like a lot to us but to a healthy non-user of health care it might seem like a lot. Of course, the smaller the company (whether they are self-insured or not) the more impact a single high cost user has on the final premiums paid by everyone in that self-insured company. So in a company of 100 the premium costs could increase by $250 per month. Thus its in the best interest of the company and even its healthy employees to not hire, or keep employing, chronically ill, high cost employees... The solution - universal health insurance, the problem it runs counter to some long held political beliefs AND it would negatively effect the bottom line of private insurance companies which are active contributors to political campaigns.</end quote>
I can definitely see how this happens. My husband used to work at a rather small company and some years our premiums jumped by HUGE amounts due to rather vaguely worded 'increased cost of maintaining benefits.' And yes, as a family who did not yet have sick family members and did not particularly understand every detail of how the medical 'system' worked- this was really upsetting, looking at the substantial chunk this took out of my husband's hard earned paycheck.

And n response to the original post~ At this point, before my husband had his current job my daughter was placed on government insurance (my dh was unemployed.) His company self insures in the manner you describe in your original post, Lauren, and for as long as Emily qualifies for her current insurance I feel I have no choice but to leave her on. I am fairly certain it would cost my husband his job if I didn't, and in any case we can't afford to find out for sure. He needs his job and works hard there as well as a second job. And she needs her insurance.
 
C

concernedmom

New member
I'm the plan administrator for our group plan (~20 employees.) We've never gone the fully self-funded route but have partially self-funded (ie self fund up to a set amount/employee/participant with a major medical policy that kicks in when the employee hits that set amount.) In that case, most cfers would hit the max and major medical would pick up even without kalydeco since in most of the partially self-funded plans we've utilized/received quotes from, the major medical policy kicks in around $10k/participant/year.

Also, as the group admin, I can tell you that in the last ten years, I was able to access employee's claims on every policy we've had - both fully funded and partially self-funded. I can't see what the claim is for or to whom it's paid, but I can see the date & $ amount. I had this access even with a fully insured plan (no self-funding); therefore, I could tell who had high utilization, just not why it's high.

For really large plans, you expect to have a few people with high utilization. A couple high utilizers won't kill those plans. Unfortunately, for small-medium plans, it doesn't matter if the plan is self-insured or fully-insured, the plan is still going to take a major hit in premiums either route. And, I can assure you that the threshold for being considered high risk is well below $800k/yr... even below $100k/yr for most plans. The thing is, with the current design, small companies can NOT afford employees with utilization in even the $200-300k/yr range... it will result in premiums skyrocketing for all employees to the point that the premiums are no longer sustainable for either the employees or the employer. It is totally NOT fair but it's also just the way it is.

The only good option I see for fixing the health care system is to go single payer with buy up options (similar to medicare now.) Is it a great option? NO, not at all. But, I don't see any other option that will ensure that high risk patients have access to quality care without bankrupting the patient or his employer.
 
C

concernedmom

New member
I'm the plan administrator for our group plan (~20 employees.) We've never gone the fully self-funded route but have partially self-funded (ie self fund up to a set amount/employee/participant with a major medical policy that kicks in when the employee hits that set amount.) In that case, most cfers would hit the max and major medical would pick up even without kalydeco since in most of the partially self-funded plans we've utilized/received quotes from, the major medical policy kicks in around $10k/participant/year.

Also, as the group admin, I can tell you that in the last ten years, I was able to access employee's claims on every policy we've had - both fully funded and partially self-funded. I can't see what the claim is for or to whom it's paid, but I can see the date & $ amount. I had this access even with a fully insured plan (no self-funding); therefore, I could tell who had high utilization, just not why it's high.

For really large plans, you expect to have a few people with high utilization. A couple high utilizers won't kill those plans. Unfortunately, for small-medium plans, it doesn't matter if the plan is self-insured or fully-insured, the plan is still going to take a major hit in premiums either route. And, I can assure you that the threshold for being considered high risk is well below $800k/yr... even below $100k/yr for most plans. The thing is, with the current design, small companies can NOT afford employees with utilization in even the $200-300k/yr range... it will result in premiums skyrocketing for all employees to the point that the premiums are no longer sustainable for either the employees or the employer. It is totally NOT fair but it's also just the way it is.

The only good option I see for fixing the health care system is to go single payer with buy up options (similar to medicare now.) Is it a great option? NO, not at all. But, I don't see any other option that will ensure that high risk patients have access to quality care without bankrupting the patient or his employer.
 
M

Mommafirst

Guest
My employeer (large university) went to self-funded model a year and a half ago. Thus far we haven't had a lapse in coverage from before the self-funded option, but I was very very worried when we went to this model and I'm still very worried about the future. We went from having several carrier choices to JUST this one. So I can't do much about it.
 
M

Mommafirst

Guest
My employeer (large university) went to self-funded model a year and a half ago. Thus far we haven't had a lapse in coverage from before the self-funded option, but I was very very worried when we went to this model and I'm still very worried about the future. We went from having several carrier choices to JUST this one. So I can't do much about it.
 
You must log in or register to reply here.
Top