The Massachusetts health care market is moving back to the future, putting employers back in the driver’s seat to control the cost of providing health insurance to workers.
Relentless cost increases are pushing the health insurance system away from the “every doctor in every network” model back to a modified version of the managed care structure that dominated the market during the 1990s. The shift is creating interesting opportunities and challenges for employers that will make upcoming health plan renewals, open enrollments and benefit communications much different from those in recent memory.
Employers shopping for health insurance coverage this fall will find tiered networks that moderate costs by encouraging patients to seek care in community settings that produce outcomes comparable to those of academic medical centers. Also on the menu will be limited networks like the one announced by Steward Health System on September 16 offering discounts of 15 to 30 percent for patients who use Steward facilities for the majority of their care.
“The degree to which employers embrace these new models will determine our ability to reduce health insurance premiums in Massachusetts. It’s important for employers and employees to realize that tiered and limited networks can provide good medical care at a less expensive price than traditional plans with open access,” said Eileen McAnneny, Senior Vice President of Government Affairs at AIM.
Employees covered by tiered networks are free to seek care anywhere but pay additional money for care received in high-cost settings. Employees who seek care in lower-cost, high-quality settings pay less money.
Limited networks require employees to seek medical care from specified doctors, hospitals and other facilities.
Tiered and select network products have been around for some time, but the price differential between these products and standard networks was not large enough to attract many employers. Massachusetts lawmakers jump-started the move to alternative networks last year by passing a health cost control law that requires insurance company to offer restricted-network products that cost at least 12 percent less than standard health plans.
Insurers report that initial response from both employers and workers has been encouraging.
Managed care networks present challenges as well, especially for geographically isolated employers who do not have access to reasonably priced doctors and hospitals in their communities.
The opportunity for companies to employ new approaches to health insurance comes as the cost pressures driving health care accelerate. The Kaiser Family Foundation reported today that premiums for family health insurance plans jumped by 9 percent this year after rising modestly by 3 percent in 2010. The most recent increase brings the annual average price of a family insurance plan purchased through an employer to $15,073.
Massachusetts employers and their workers pay the highest average health insurance premiums in the country.
The advice for employers? Rethink the purchase and renewal process for health insurance. Educate your employees - the end users of health care services - about the cost of providing health insurance, the plan design decisions they make, and the rationale(s) behind them. If you use an insurance or benefits broker, make sure to maximize that relationship, ask right questions, obtain all the information you need to make a good decision.
AIM will conduct a Webinar on October 13 from 10-11 a.m. to provide an overview of the new cost-control options available to employers. The sessions will include practical pointers on working with brokers and optimizing the open-enrollment process. The Webinar is free to AIM members and costs $75 for non-members.