I found this Kaiser Health News article to be particularly interesting. It considers the possibility that once the health insurance exchanges are up and running in 2014, large employers who self insure might begin structuring their health insurance coverage in such a way as to be unappealing to employees who have the greatest need for health insurance. 60% of employees who have group health insurance are covered by a self-insured policy. These plans give the employers maximum flexibility in terms of structuring the plan – for better or for worse.
The article includes thoughts from experts with differing opinions on the issue. Amy Monahan, a health law expert, says that it’s very conceivable that large self-insured employers might take steps such as limited the number of specialists in the network or raising the copays and deductibles in order to make the plan less appealing to the sickest employees – those who need to use the coverage frequently or see specialists on a regular basis. The result might be that the employee is able to find better coverage in their state’s health insurance exchange. The obvious downside there is that the individual policies in the exchanges run the risk of becoming overburdened with unhealthy members (remember, all policies will be guaranteed issue as of 2014), causing premiums to spiral upwards even faster than they do now.
But Carolyn Pare, president of the MN Buyers Health Care Action Group, said that it’s unlikely that employers would deliberately tailor their health insurance policies to encourage sick employees to opt for coverage in the exchanges. She believes doing so would be a PR nightmare for employers and that the cost savings achieved by such a strategy would be outweighed by the damage to the company’s reputation. I can see her point, but health care costs have become an increasing burden for employers over the years. Deductibles and copays have been increasing steadily over the years, as has the amount that employees have to pay out-of-pocket for their coverage. It would be understandable if employers are tempted to try to lower their health care costs by creating plans that appeal more to healthy employees than sick ones.
I doubt we can really know the answer to this question until if and when the exchanges are more finalized and the health care reform law is more solidified (ie, approved by the Supreme Court). So much is up in the air right now that it’s probably hard to get an accurate picture of what employers will actually do two years down the road. But legislators have to consider the possibility of sick employees being funneled into the exchanges and take steps to protect the financial health of the exchanges in order to avoid dooming them before they even begin.
Amy Monahan suggested that there could be a law making employees ineligible for coverage in the exchanges if they are eligible for employer group coverage. Or there’s the possibility of a law similar to the one that Colorado designed to protect the state’s high risk pool from a similar scenario – employers here can’t reimburse employees for individual health insurance premiums if they have had a group plan in place within the past twelve months (in the case of the exchanges, they could make employees ineligible for coverage in the exchanges for at least a year after leaving a group plan, assuming they are still eligible for coverage under the group plan and have just opted out). Either option would help to protect the exchanges, but they don’t do much to prevent employers from structuring their health insurance policies to make healthcare significantly more expensive for the sickest employees.
Part of the appeal of self-insured plans is that the employer has so much flexibility in terms of the plan design. But maybe we should look at placing limitations on that flexibility in order to protect the employees. That would seem especially important if laws do end up being created to block exchange eligibility for employees who have access to group coverage. For example, a coverage change that requires all employees to pay higher premiums might be seen as fair (since it impacts all employees equally) whereas a change that dramatically increases copays might be viewed as unfair since it places more of a burden on employees who are chronically ill and make frequent visits to the doctor.
A lot of this remains to be seen. The health care reform law still has to be reviewed by the Supreme Court, and we have a major election cycle next year and another full legislative year after that. But if everything about the PPACA remains as it is now, lawmakers will eventually have to address the possibility of self-insured employers designing health insurance plans that encourage their sickest employees to opt for coverage in the exchanges instead.
