{"id":5544,"date":"2023-10-13T14:33:42","date_gmt":"2023-10-13T14:33:42","guid":{"rendered":"https:\/\/www.horsesforsources.com\/?p=5544"},"modified":"2023-10-13T15:58:52","modified_gmt":"2023-10-13T15:58:52","slug":"self-insured_healthcare_hugesavings_101223","status":"publish","type":"post","link":"https:\/\/www.horsesforsources.com\/self-insured_healthcare_hugesavings_101223\/","title":{"rendered":"Employers can save $350 Billion a year if they shift to a self-insured healthcare model"},"content":{"rendered":"

Did you know that the average time a US employee spends reading up on their company health insurance coverage is 15 minutes… and costs their employer $20K a year?<\/p>\n

So you can imagine most US employers don’t spend much more time considering these policies either (I know I certainly don’t!).\u00a0 The issue is we all take the healthcare insurance system for granted<\/em>; we pay these exorbitant rates to these mega-corps and just assume this is a cost of living and doing business.\u00a0 OECD data shows that in 2021 alone, the US spent nearly twice<\/em> as much as the average OECD country on health care \u2013 and three times higher than even Japan and South Korea:<\/p>\n

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However, our incredible healthcare program leader, Rohan Kulkarni<\/a>, has moved heaven and earth to force people (including me) to think about this supreme waste of hard-earned income and point us to the whopping 40% savings on offer, in the region of $350 billion a year, if we move from these exorbitantly expensive group plans to a self-insured model where we take a bit more risk for a huge amount of savings.<\/p>\n

And when the “risk” is essentially the health of our workers, that’s a pretty good place to focus on as an employer in today’s high-stress work environment, where the cost of living is skyrocketing, and we’re struggling with creating more sane work models that do not involve ten communications mediums open at any one time…<\/p>\n

Net-net, few of us realize US health insurance is a $4 trillion dollar annual market this year and is likely to surpass $7 trillion in the next five years.\u00a0 Folks… let’s face it, we’ve been subjected to a mammoth insurance con job for decades, and now we have the opportunity to do something about it:<\/p>\n

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Click to Enlarge<\/a><\/em><\/p>\n

So let’s hear more from Rohan on how this all works and why we need to take this shift to Employee-sponsored insurance very seriously…<\/em><\/p>\n

Why the evolution to employer-sponsored healthcare is so prominent<\/h3>\n

In the US, our healthcare is covered\u00a0 through four primary funding vehicles;<\/p>\n

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  1. Medicare<\/strong>, if you are a senior,<\/li>\n
  2. Medicaid<\/strong>, if you are amongst our most vulnerable,<\/li>\n
  3. Group Plans<\/strong> (commercial insurance) if you work for an employer who buys insurance for you or, increasingly,<\/li>\n
  4. Self-insured employers<\/b> who are underwriting the medical risks of their own employees.<\/li>\n<\/ol>\n

    In 2020, enrollment in self-insured employer plans passed group plans, becoming the largest segment of the market (see Exhibit 3) with the potential to alter how we buy, deliver, and consume healthcare.<\/p>\n

    Exhibit 3: Healthcare coverage configuration has evolved, and it will continue to change materially over the coming decade<\/strong><\/p>\n

    \"\"<\/a><\/p>\n

    Data: CMS, US Dept of Labor, CBO, Kaiser Family Foundation<\/em>
    \nSource: HFS Research, 2023<\/em><\/h6>\n

    This reconfiguration of the marketplace will have enormous implications over time, some explicit and some subtle. Consider one such large yet subtle change (see Exhibit 4) that can open options for employers seeking non-health insurance partners to address their employee needs. National and large regional legacy health plans are becoming service providers as their risk business declines and their value proposition dilutes. Consequently, self-insured employers must look beyond their legacy relationships to new ones that could provide better health and care delivery models at more predictable and lower costs.<\/p>\n

    Exhibit 4: Health plans are now essentially a services business competing with service providers.<\/strong><\/p>\n

    \"\"<\/a><\/p>\n

    Data: Company 10K reports
    \nSource: HFS Research, 2023<\/em><\/h6>\n

    The shift in healthcare funding can have significant financial benefits for self-insured employers<\/h3>\n

    Self-insured employers continue to buy their services through health plans despite underwriting their employee\u2019s medical risk. The services that are generally acquired include provider network (list of doctors and clinicians), benefits management (administered by benefits administrators<\/a>), and back office functions (claims processing, compliance management). These legacy administrative services add significant costs with diminishing value across the triple aim of care (cost of care, experience of care, and health outcomes).<\/p>\n

    Some newer models are beginning to get some traction. They include direct employer-to-provider (health systems and hospitals) contracts for either disease conditions or whole health through some form of capitation, fixed fee constructs by disease condition<\/a>, and hybrid models that split up primary care and acute care<\/a>. As employers explore new models to acquire and deliver care to their employees, they will likely see material benefits across multiple financial dimensions.<\/p>\n