Are high-deductible health plans and HSAs dead in the water?
What impact will new laws and disruptive partnerships have on benefit advisers? At the EBA Workplace Benefits Renaissance Tuesday, Michelle Capezza of Epstein Becker Green interviewed James Schutzer, vice president of JDM Benefits on what impact the Amazon, JPMorgan and Berkshire Hathaway alliance will have on healthcare, as well as if HDHPs are on their last legs. The following is an edited and condensed transcript of the panel “Regulatory Update: Healthcare and Benefits in 2018 and Beyond.”
Michelle Capezza: When we think about transparency in pricing, we start to see what Amazon is doing with JP Morgan and Berkshire Hathaway. They are an in-house version of an association health plan of their own. They are going in and negotiating the prices themselves directly, gathering data and Amazon will use its data analytics and delivery to deliver benchmarks across the country. What have you heard?
James Schutzer: Their mission is to try to affect change in the healthcare delivery system.
That will include data and making it accessible to employees and to better track outcomes. When it comes to delivering healthcare, obviously depending on what doctor you go to you can get different opinions, different forms of treatment at different costs, but there's really no outcomes that would say if one is better than the other. I think they want to aggregate all this information, make it accessible to their employees and let them make decisions that are going to be sound with the data backing it up. Ultimately, they want to reduce the cost of healthcare for those organizations which represent about a million people.
Capezza: Do you still see the traditional plans remaining? Something that's been evolving in the last few years is that high deductible health plan or the HSAs are not growing. Are they sort of the old way of dealing with the ACA?
Schutzer: The initial jump in the membership which they estimate to be about 20 to 30 million people, I think we've seeing that starting to peter out for a little bit.
If you don't have those data transparency tools to make those decision when you have a high deductible health plan, you can get caught in a situation where the exact same test or service [vary widely in price]. I think that's one of the areas that unless the plan members are empowered to have that information to make those decisions, it’s kind of putting a Band-Aid on the situation.
I think the innovation of high deductible health plans and HSAs has kind of petered out. I think there needs to be some innovation there, but you still need to have that transparency.
Capezza: Association Health plans are another new development that is expanding the definition of an employer. We're in a comment period for the Jan. 4 proposal for businesses to form an association to provide health insurance. This is also an example about the gig economy and people being self-employed and banding together and being able to purchase across state lines if they share a common industry or geographic area. But what are the drawbacks? Do we have an opportunity to impact markets?
Schutzer: Although I don't think it's the silver bullet in terms of fixing the healthcare system, what it would allow employers to do based on industry, trade and geographical region is to band together and pull out of the small-group market and band together as a large group. That does certainly pose an issue for the groups that are going to be remaining in this community rated or small-group market.
There's a concern about adverse selection and although the regulations say that you can't discriminate based on age or health status, there's certainly some concern that that can that could happen. You can specifically find and target certain industries where you would expect to have a younger population so there is concern and adverse selection by allowing the association health plans, plus you have the state regulations and how they would oversee them as well.
Capezza: What should we do about advising employers? What is the role of the consultant broker in all this?
Schutzer: Do you have a particular niche but is it a non-profit? Is it technology companies or involved with a Chamber of Commerce or some other type of business organization? If you have that audience that’s trying to put together a plan that's going to work but some of the obstacles you're going to have would be, can you secure their stop-loss? What carriers are going to be willing to write a plan like this without any experience? Certainly from stop-loss carriers, you have to then put together the networks and put that all together.
I can tell you that that we deal with a lot of nonprofit business organizations and they are hungry for this type of idea.
Certainly, it doesn't really get to the root cause. It may be a temporary Band-Aid, pulling them out of the small market, maybe having a near-term reduction in premium, but ultimately it's going to catch up. As the system isn't changing here soon. It’s kind of like using your Discover Card instead of your Amex.