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The Consumerization Of Insurance Brings Innovators And Entrepreneurs To The Playing Field

Recently I saw a provocative headline from an article published earlier this year in The Fiscal Times --  Hospitals Plot the End of Insurance Companies. The article highlights a growing trend in which healthcare systems look to increase revenues by providing new products and/or services direct to consumers or employer plan sponsors.

The primary example cited in the article was that of Mount Sinai Health System, the largest healthcare provider in New York. Beginning in 2015, Mount Sinai Health System will begin to offer their own Medicare Advantage plan direct to employers/consumers.  Historically, Medicare Advantage plans provided by insurance companies have been a competitive alternative to government-provided Medicare Part A & B offerings in many states. This direct to consumer approach is just one of several innovations that are starting to shape—or reshape the landscape of healthcare and health insurance.

Whether you are for or against the Affordable Care Act (ACA), it is undeniable that the new rules of healthcare are beginning to show signs of coagulation. As with any industry going through a dynamic transformation, once rules are established and interpreted, innovators and entrepreneurs race to redefine the marketplace.

In Connecticut, we have begun to see the impact innovations are having on the market as more and more employers evaluate the following:

  • Private Exchange: An employer can define their annual contribution and provide employees with a wider range of products and services via a Private Exchange solution. Insurance intermediaries (think OneDigital; AON; Willis) are leading the way in offering these new marketplaces and are in the process of introducing carrier-based exchanges as well.
  • Alternative Funding: Instead of a traditional fully insured arrangement, companies as small as 25 employees can consider non-traditional ways (level funding, minimum premium, self-funded) to fund their health insurance risk. One of the benefits of an alternative funding approach is the avoidance of some ACA taxes.
  • Captive: Homogeneous or non-homogeneous companies have the ability to band together and form their own company for the purposes of insuring their health risk.

Soon we will add a local direct to consumer option to the mix of considerations for employer groups. Locally, ProHealth Physicians, the largest primary care physician group in Connecticut, will launch a direct to consumer approach that will allow employers to contract directly with the ProHealth Physicians network across Connecticut. By moving away from a Fee for Service payment model to a Capitated arrangement (fee per member per month) coupled with population health management services, ProHealth Physicians will be looking to provide employers with an innovative way to control their healthcare costs.

At OneDigital Hartford, we are actively working with, evaluating and seeking out all options available to present to our employer groups. Rest assured that the innovations are just beginning and we look forward to assisting our clients in capitalizing on any and all appropriate solutions that will deliver on what we know are the five things that mean the most to employers—better benefits, lower costs, healthier people, no  administrative headaches and assistance navigating health care reform.