Employers Can Stop Worrying on Health

With the launch of Apple's HealthKit, the pieces are now in place to enable employers to get out of the health risk business within five to 10 years, if not sooner. Notice I use the term “health risk,” by which I mean that the cost of the employee’s health insurance will not be priced by the employer. The cost will no longer be based on the average age of the employee population, claims experience or any of the standard underwriting/pricing rules used today. That does not mean an employer will not contribute to some of the cost, but the employer will not have to worry about setting budgets based on its medical renewal. Employers won’t have to worry about managing large claims, employee wellness (unless they want to), hospital networks or plan design. While I do think employers don’t mind helping employees pay for healthcare, I don’t think they ever wanted to be in the health insurance risk business, or the claims management business or the wellness business, or to wonder if the person they just hired has a wife at home expecting triplets. There are three main reasons why employer-based health insurance is coming to an end: reductions in Medicare/Medicaid reimbursements, the advancement of mobile technologies by firms such as Apple and cost shifting to employees. Medicare/Medicaid reimbursements The combination of the expansion of Medicaid under Obamacare along with the reduction in reimbursements for services provided under government programs is forcing hospital systems to change the way they do business. In fact, hospital systems are looking to get into the insurance business (a la Kaiser) because they need to get money from healthy people, not just sick people. Almost everybody wants this to happen. Employers want out of the risk business. Hospitals need and want capital. The government wants the relationship to be between the doctor and the patient. The employee wants lower healthcare costs. And, I don’t know about you, but I would prefer that my primary care physician -- not my employer -- worry about my health and wellness. So, in my opinion, the nation is going Kaiser, the staff model HMO route, because that’s what the market will want. Advancing mobile technologies If a provider system is responsible for my health care, then it needs access to my information to manage my health. Apple, with its HealthKit, and others want to make it easier to gather a person’s health information and make that information available to the provider responsible for caring for that person. Kaiser is one of the first provider systems on board with Apple. I am not surprised. Today, I can get on a scale in the morning, and my scale can send my weight via Bluetooth to my smartphone. Blood pressure tests, blood glucose tests and other relevant health information can be also easily be sent to my cell phone, which I can then make available to my doctor in real-time. The doctor would be responsible for my wellness, because she is working for the system that is responsible for keeping me healthy and, I hope, out of the hospital. Imagine the doctor having a system that would house all this information on her patients. The system could automatically send me an email or text message to call and set an appointment because I put on 10 pounds. Today, I get an email from Jiffy Lube saying I need an oil change for my car but never get an email from my doctor saying I need a physical. This is about to change. Employees want to pay less I’ve heard this before: HMOs were tried in the '80s, but they really didn’t totally grab the market. Well, things are different now. In the '80s, the employer paid close to 100% of an employee’s health insurance costs. So, the No. 1 variable when selecting a plan back then was provider access. Is my doctor/hospital in the network? That is all I ever heard. As a result, every doctor and hospital joined every network. Today, it is different. Employees are paying 40% to 50% of the costs, and the percentage is going up. Cost has become the No. 1 variable for an employee when making a health insurance purchase decision. The statistics are out there: When given a choice in plans, employees are choosing lower-cost options. They are now willing to change doctors and sign up for smaller networks for lower costs. What we have is the perfect storm: government intervention, advancing technology and a cost-conscious consumer. This storm combines with the fact that everyone wants the change: the government, employers, employees, provider systems and the technology companies. I want it, too. I don’t want my employer knowing my health information or worried about my wellness. I want my doctor to know. I want my doctor to see me because he thinks I need to see him. I want a test because I need it. I don’t know what I don’t know, so I need someone to tell me. The shift from the risk being on the employer, employee and insurance company, to the provider of care, is a welcome one. I want my physician to want me healthy, too. In this new scenario, there is a role for the insurance companies (look at what Aetna is doing), the brokers and even the employers. I do believe the government and the providers will want the employer engaged in educating employees on what, for many, will be a new healthcare system. Employees will have to learn how to use some technology. How brokers can participate in this process is another article. As the often-used quote says, “Healthcare should be between the patient and his/her doctor.” The stars are aligning for this to happen.