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National Association of Alternative Benefit Consultants

What a ride it has been. The uncertainty has never been greater for the quality and pricing of health care in America. What has remained the same is the foundation upon which quality care and cost reduction can be achieved.

In the early 1990s, HMO became the plan that was going to save health insurance in America. Immediately following the 1992 election, Hillary Clinton was going to sweep us all into a large government run HMO model. Fortunately, this government take-over never saw the light of day. Now here we are, 18 years later, marching down the same old road that will do nothing to control healthcare costs.

In the mid 1990s, legislation was passed introducing tax-advantaged Medical Savings Accounts. In their infinite wisdom, Congress chose to limit these plans to groups under 50 employees and, as a result, they made little impact. In 1998, I attended a continuing education presentation of over 300 participants at the DuPage County Health Underwriters and watched a presentation on Medical Savings Accounts (MSA) by Ron Dobervich. With over 300 attendees listening to Dobervich’s message, I decided with five other members to further discuss this new concept. Dobervich made so much sense that I really wanted to implement these plans for my clients because it was much more efficient for both the employer and employee. You must remember that the old prepaid medical plans that are purchased today, with prescription co-pays, doctor office visits shield the employees from understanding what the real costs are for these services. What was also disheartening was that if a group was truly healthy, these plans never gave the group any money back for non-use and still raised their costs the following policy year.

In April 1999, as a member of the Council for Affordable Health Insurance, Dobervich was asked to go to Washington and report what effect MSAs were having in the small group market. When he and two other council members, Harvey Randecker and Stuart Slonin, returned from Washington, they got together and decided there was a need for a trade association to provide educational services to agents and brokers about these new plans called Consumer Driven Health Plans (CDHP). Slonin had ties to a trade publication and Randecker gave 110 per cent to launch the National Association of Alternative Benefit Consultants (NAABC).

In the early days of CDHPs, most insurance companies refused to provide enough of a discount to make the plans effective. There was too much additional risk with the higher deductibles and insufficient premium savings to provide funding. One of the best actuaries is Mark Litow, of Milliman USA, at the Milwaukee, Wisconsin office. He has testified before Congress on the initial set up of MSA plans and has overseen the setting up of a whole country’s health plans, most notably South Africa’s MSA plans that worked wonderfully for over ten years until political upheaval destroyed the free market.

Then in 2002 and 2003 came two major CDHP breakthroughs. First the government gave clarity to Medical Reimbursement Accounts, renamed Health Reimbursement Arrangements (HRA), and the expansion of the MSAs to all size groups into Health Savings Accounts (HSA). This time the insurance companies got it right and started applying the proper discounts to CDHP plans.

As we all know, in real estate it’s location, location, location. For us in the CDHP, it’s education, education, education. What we are now giving the employee is a better benefit, less out of pocket with a hard dollar maximum for RX costs—all at a lower cost. What we had to overcome by education was the understanding of why the underlying insurance plan had to be a “high deductible” catastrophic insurance policy and why it made sense to do it.

Where do we stand today? At the heart are two drastically different health care delivery models. One, which was just passed into law, is predicated on utilizing top-down controls to manage cost and access. These designs always increase cost and limit supply. A short documentary entitled Dead Meat can be viewed at www.onthefencefilms.com, a 24-minute documentary about the rationing of health care in Canada. The other model is based on the premise that the employee, when properly educated, incentivized and given total price transparency, will manage costs much more effectively than any government bureaucrat. CDHPs give real dollars to employees to better manage their health care spending. A new price transparency system that has just been developed now allows employees to compare costs in any preferred provider organization (PPO) with any insurance carrier in the United States.

Most agents and brokers today are unaware that medical service costs for services such as lab tests, x-rays, MRIs and CT scans provided by the same physician within the same PPO can vary by as much as 500 per cent, depending on where the tests are performed. If you have a small co-pay, who cares what the cost is, but if you have a stake in the cost savings you will be willing to go shopping. This new medical concierge system does the price comparisons for you and any dealings with a change in facility with the doctor are done by the service. It is a total hand-off by the employee, other than that first phone call. CDHPs have been shown to save the employer between 12 and 20 per cent conservatively in the first year and by adding the concierge service, it lowers claims cost by an additional $600 per employee per year.

As an agent, I have no control over insurance premiums, but I can control the designs. With these programs, I have been able to save my small the medium size clients from $1,000 to $3,000 per employee per year. Some companies are now spending less on health insurance plans than they did five years ago. And most importantly, these savings didn’t come at the expense of the employee. The total out-of-pocket costs for employees actually decreased compared to old plans.

We started the NAABC to help educate agents and brokers on bringing the consumer movement to the marketplace and to do it from within our industry. Even with the passing of this recent legislation, our trade association is still in the forefront of bringing better ideas to our customers and giving them better choices.

Since April 2002, NAABC has educated over 2,300 agents nationally through its Chartered Benefit Consultants designation course. For more information on our trade organization and/or continued agent education, contact Harvey Randecker via telephone at (800) 627-0552. If your company would like to improve its own bottom line and become more efficient in health care choices, contact Livio L. Andreatta, Midwest Public Relations Officer for the NAABC and President of L.L. Andreatta & Associates, at (708) 647-9353.  

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