Pay or Play? Is It Dead or Alive? vote today.

Will they eliminate the employer mandate? If the Obama administration remains consistent, my guess is they will. I cannot believe I am agreeing with Robert Gibbs, the former Obama Press Secretary, but sometimes the stars align. They already delayed it, exactly one year ago today, for employers with 50 or more employees. And for those with 5o to 99 employees, they have delayed it until 2016.
Now, we are bombarded with stories of employers seeking solutions just to survive. Employers are considering skinny plans that meet the requirements of Minimum Essential Coverage, but not much more than that. Well intended employers are even considering the Minimum Value Plan option, aka Bronze Plan, with a maximum contribution from employees of something close to 9.5% of pay. But the unintended consequences are this will void the employees ability to buy a subsidized plan through h the federal or state exchanges.
The goal was originally to get everyone covered, but the law was written poorly, and it is loaded with unintended consequences. I just read about another one. Written into the law is the requirement that home health care employers will now be required to pay employees time and a half for anything over 40 hours. If you are in this business you know many employees want to work 50 to 60 hours one week, and take the next week off, or work fewer hours. This new “gotcha” will complete change the industry because employers will be forced to adjust the hours worked, which could in turn add so much to their overhead that they could go out of business, all because they need to staff appropriately.
This is just one industry example. Too much pressure from business may force the administration into a repeal of the mandate and place more pressure on the individual mandate. And if employers offer skinny plans or MV plans simply to avoid the penalties, then we have not done anything to increase the number of covered citizens.
From the insurance carrier perspective, adverse selection, a situation where only the highest risk individuals actually pay for coverage, will continue to put a lot of upward pressure on rates. They need everyone to buy, and the individual mandate is currently the best option.
So unless or until we consider the 8% of payroll mandate, as some conservative politicians are throwing around inside the beltway, and not force employers to do things that will ultimately kill jobs or put them out of business, this will be a very interesting 18 months. I hope everyone makes it, because it always seems that we deal in a win/lose environment in Washington. What happened to win/win?
Reply with your vote- Yes = repealed for good NO = the law stands as is.


Health Insurance- Evolution not Revolution

Have you heard? health insurance is changing- again! For those of us in the business of selling, servicing and managing health insurance plans, this is not news. At The Wright Group,, we understand this, but for the millions of Americans who only think about heath insurance when they need to use it, it is a big deal.

The latest evolutionary step is close at hand. We are beginning to see a change in the provider networks. Back in the early 90’s we saw capitation take its place in the market by paying physicians a flat rate per employee per month (PEPM). At the time, they did not care if any patients ever showed up in their office because they were paid regardless of the number of patients seen. Quality of care was not the driving force, it was all about the insurance carrier reducing claims costs.

That strategy fell flat, and we shifted to broader networks and consumer friendly plan designs. But costs continued to rise, and today we are at yet another record breaking premium level. We are on the verge of more network changes- again. Tighter Rx claim controls, higher deductibles, focusing on wellness are all wrapped around -you guessed it- smaller networks. But this time the networks are not capitated. They are driven by aggressive reimbursement levels and quality of outcomes. Providers soon will have to take some of the risk.

We are not sure where this will end up, but as the evolutionary process continues, one wonders when the real revolution will start, and will it be the patients or the providers to revolt first? Patients don’t have much choice, but physicians do, and until we make sure they are being treated fairly, we run the risk of losing them to private, direct or concierge practices that only take cash- not insurance.

As the system evolves, be on the lookout for private exchanges that offer multiple insurance carriers with multiple provider network options. It is happening right now with some of the largest employers in the country, but we expect to see it in the small and mid-size employer marketplace soon enough. It is just a matter of time in the evolutionary process. 303-863-7788

Wellness is making me ill.

My clients, and many of my internal and external industry associates are having an endless debate on the effectiveness of wellness programs. There are a number of issues to debate because even the definition of wellness varies depending on who you are talking to. This is where my frustration (and indigestion) begins.

Think about it. Does it mean getting people healthy, keeping them healthy, or some combination of the two? Are we trying to reduce claims, or shift costs to the employees? Are we trying to measure the results from the efforts, whatever those may be, and do we have a method that is reasonable and valid? How much is anecdotal evidence, and why is that evidence even important?

All too often, those in the wellness community are working very diligently to help all of us in the employee benefit industry to feel we are working for the common good. They provide us with a steady stream of data showing results, and the holy grail of ROI, return on investment. But the jury is still out. It is virtually impossible for a small to mid-sized employer, ( 50 to 500 employees) to develop a scientific, mathematical method to measure results and calculate a real ROI.

So why does the industry persist? I think it is because ironically it makes us feel better. What I mean is it gives us something to communicate to employees about why costs continue to rise year after year. It gives us sense of accomplishment, because at least we are trying to make an impact through hard work, and effort to design a wellness campaign to “turn things around”!

But because the small to mid-size employers I work with have turnover, and contuniaully lose and add both healthy and unhealthy employees or dependents, it is unlikely or dare say it, down-right impossible to get any ROI just from a lot of incentives.

If you want guaranteed results, it is going to require some penalties, premium loads, high deductible health plans and a little something from the past. We may want to re-engage second surgical opinions, pre-authorizations and incentives for using low cost providers. This might even include tighter provider networks. It can be built with incentives for selecting lower cost services and providers with lower co-pays or even cash bonuses. And there is new technology giving employees phone apps, web based tools and resources to help explain how to implement the technology and get the desired results.

Don’t give up yet. It will take a solid strategy, some investment, and definitely some time to get tow where your particular organization needs to be.

Gee, I feel better already! 🙂


What to do with Obamacare (before it’s too late!)

A lot of people would like to repeal this law, but frankly the horse is out of the barn, the ship has sailed, it’s too late. But it’s not too late to make some changes that we here in the trenches see as possible solutions that will benefit all parties concerned, except the politicians.
First, let’s keep the rule that no one can be denied coverage for pre-existing conditions. We need to have a few rules and requirements however, to avoid some people waiting until they have something wrong happen. After all, you can’t buy homeowners insurance after your house starts on fire, right?
Next, we need to make it affordable, and the big argument of rising health insurance is due to the “free” care hospitals and doctors provide to people in the emergency rooms all over the country. They then cost-shift to those of us with insurance. If that is really happening, then why don’t we reimburse those providers for that care through the tax system by hitting everyone’s Medicare payroll tax by ½ percent? The reduction in health insurance rates should be more than enough to offset these costs.
Next, give employers an incentive not to drop their group plans. Let’s simplify the tax deductions for HSA and HRA and FSA plans. Make it easy for employers to give a flat dollar amount to all employees, with flexibility to legally discriminate to reward long term employees, incentive new employees and yes, give some key people a little better benefit than the rank and file who care less about benefits and only want money! Even I can come up wit ha number of scenarios that may reward some over others, but we can do it in a equitable fashion. As many have said before me, “Fair does not mean equal!”
Speaking of FSA, HSA and HRA plans, wouldn’t it be easier if we had one qualified account, fro everything? Employers, employees, and even the government could put money into these accounts, and people could use the dollars to pay for insurance, other benefits, reimburse themselves for insurance premiums, pay child care, or whatever we can come up with as qualified benefits? Set an annual maximum based on income, and leave it alone. Once again, the tax shifting burden being placed onto the entitlements of Medicare, Medicaid and Social Security, and now Obamacare premium subsidies can be redirected and offset by a smarter use of funds.
Try to make it less complex for insurance carriers, by providing a consistent set of rules, and then turn them loose to compete fro the business.
Let the providers of healthcare have the latitude to manage themselves, with some healthcare industry professional oversight. Don’t burden them with impractical or unreasonable government rules. They know what they need to do, so let’s give them the opportunity to lead instead of follow like lambs to the slaughter.
Let me know your thoughts and ideas. Maybe we can build some realistic momentum and submit some viable solutions so we can turn this around. As Albert Einstein once said, “Don’t try to solve a problem with the same logic that created it in the first place”.

Is Obamacare Working? It depends on who you talk to!

Wow, have you seen the numbers yet? I don’t like to get too political, but I am very frustrated with the roll-out of the Exchanges, both nationally and locally. And I suppose my frustration is not  based on ideological differences, well at least not entirely.

You see, after 30+ years  in the health insurance business I have seen lots of changes, many changes not in the best interest of the consumer, and not always the best for the employers either. For example, I think about how the concept of managed care started out with such a bang, and slowly slid back to a more manageable logical level of practical claims management and provider contracting.

We have seen a large number of smaller health insurance companies and HMOs come and go as competition for membership became too much for them, and they couldn’t compete with the big 4 or 5 companies in each market.

Consumerism had a rough start, but we are seeing consistent growth in HDHP (High Deductible Health Plans) and the demand for more consumer oriented information to help us all make wiser choices. Who knows if Congress or the IRS starts to take away the tax advantages.

But from the start of Obamacare, we were primarily focused on, depending on who you want to believe, the 40 or 50 million Americans without coverage, due to the big, bad insurance companies who were cherry-picking the healthiest people, and declining those who had any sort of pre-existing conditions. Ok, I get that, but where in the heck are they now? Over the last 10 to 15 years, many states, including my state, Colorado, developed high-risk uninsurable programs. They were often a bit pricey, but they served a great purpose as a safety net for those who had been declined.

Now that we have eliminated the ability of the carriers to decline coverage to those with a pre-existing condition, one might conclude that all is better now, but where is everyone? Have you seen the numbers? Irrespective of the government web site problems, if you were to start breaking down the numbers, weren’t we all expecting to see millions and millions of citizens clamoring for coverage? In Colorado, the numbers for those signing up are a lot lower than the estimated 400,000 uninsured people roaming the state. I heard there were nearly 70,000 people who signed up through the exchange. Most of these people are now on Medicaid. So where is everyone else?

I then saw this morning that there are now over 3 million who have enrolled through the federal exchange. So I ask again, where is everyone else? I am saddened by the results. Deep down inside I was hoping we would see all of these people who needed coverage get what they needed. Most of the people are getting redirected onto Medicaid. And most of those same people could have gotten on Medicaid before, so I don’t se the big deal about the numbers. The rest have become part of the political and ideological debate, and most are paying more than they expected to pay.  I would not call this a success, and I don’t see it succeeding any time soon. I am afraid we have created another big government money burning machine.

So what should we do now? No, I am not advocating for repeal of the whole thing. We can do things to make it better, and I will try to describe those ideas in my next article, “What to do with Obamacare”. 

I think I am going Captive Crazy, but in a good way!

Employee Benefit Group Captives, Stop-Loss Captives, or just call it a Captive, but no matter what you call them, it does seem the interest level and take-up levels are on the rise. Why? Maybe because it gives control back to the employer and moves them away from the fully-insured pool of what has been and will continue to be steadily rising rates.

To help you understand captives, here is something I wrote for our website,

Employee Benefit Group Captives                            

 A Group Captive allows smaller employers, (50 to 500 employees) a tangible way to reap the benefits of self-funding while minimizing risk and volatility. With all of the changes affecting this size of employer because of PPACA, more employers are seeking alternative strategies, and a group captive can present a viable alternative for those willing to take action. By working together, a number of employers leverage their size to purchase services like stop-loss and administration at prices only available to larger employers. 

How does this compare to a fully insured bene fits program?

Projected costs (expenses and claims) are estimated to be 3-7% lower in the first year and are potentially compounded lower after that. With the actual funding set up similar to fully insured contracts an employer can significantly limit the downside risk to around  15% of the annual spend, which is also 10% to 15% lower than if they were self-funding on their own. 

How does a captive work?

Each employer in the captive covers its own small, less volatile claims and purchases traditional insurance for catastrophic claims. In addition, each employer contributes premiums to the group captive to collectively cover claims that fall between the small, self-funded layer and the catastrophic layer. The captive acts as a “shock absorber” or “safety net” reducing the risk to the individual employer.

And if funds paid into the captive exceed the claims, the group shares the profit on a pro-rata basis. One key to increase the chance for success and mitigate claims in though the introduction of health management initiatives designed to improve health, lower claims and control costs.

Why would an employer do this?

Employers taking advantage of a group captive strategy have a few common characteristics.

  1. The current fully insured system is broken. The system is designed to protect fully insured insurance companies. Since their profits are based as a percentage of premium, so the higher the claims the higher their profit. Where is the incentive to lower claims?
  2. In the fully insured environment, when you have a bad year, your rates go up significantly. When you have a good year, your rates don’t go down. Reducing your claims benefits the insurance company, not you. These employers want to reap the benefit of lowering their claims.
  3. If you can think long-term, you can see the advantages of lower claims utilization over a 3 to 8 year period. Doing nothing will not improve your situation, but taking action may have a positive long term impact of controlling your costs. 
  4. Self-insured employers are exempt from many of the costs associated with PPACA reform. For example, the Premium Revenue Tax, estimated to be between 2% and 2.5% only applies to fully insured plans.


How else has the ACA reform changed things?

The number of employers leaving the fully insured marketplace and self-insuring has increased and the ACA has only amplified that movement. The changes to the uninsured, underinsured and those with pre-existing conditions will result in additional costs being pushed into the fully-insured system. The carriers will simply pass these costs onto the employers.

What are the downside risks?

Self-insurance can be “bumpy”. This volatility can be driven by a bad claim, a bad year or even a bad month of cash flow. Stop-loss insurance helps smooth some of the volatility. In a traditional, unbundled program, where an employer buys stop-loss, rents a provider network and hires a separate administrator to pay the claims; large claims in excess of the stop-loss can be lasered.

How does the captive mitigate this risk?

The captive layer, the risk that all the members share, helps mitigate the need for lasers because the captive has purchased a significantly higher stop-loss policy that rarely gets penetrated. So the employer first pays up to their normal, lower stop-loss level, but the amounts over and above are shared collectively up to the overall stop loss of the entire captive. With this structure, the captive members rarely have claims that break the higher stop-loss level, which means a better renewal because of fewer large claims.

What else should an employer consider?

This is a long term solution, and is not for every employer with 50 or more employees. Every employer should decide if they want a solution that rewards them and their employees for managing their claims better than the rest of market. And can they commit the time to make it a success?

Financially, each employer must determine if they can afford to save money; meaning are they financially strong enough to handle some variable cash flow due to fluctuating claims.

Can you get along with others?  Depending on the captive structure, each captive member has influence in the management of the captive. You become accountable to each other, and you must decide if you can work with the other like-minded employers all seeking new ways to fund and pay their claims, and reward employees for better lifestyle decisions that lower claims utilization, and create an environment for success. 

I think you owe it to yourself and your organization to explore what can be a solution to control costs by managing claims better than the market.

All the best,

Dennis Miceli

How to Drive a Cadillac on a Ford Budget, or Happy Thanksgiving!

Remember when one of the goals of an employee benefit plan was to figure out how to provide the best benefits for the least amount of money? With steadily rising costs of healthcare, trend factors still in the double digits, and a slow economy, this is a real challenge for any employer. I think the shift is slowly taking place, going from nothing but the best, to something along the lines of what is the best we can afford in today’s environment.

Back in the 50’s and 60’s, when the baby boomers were just being born, our economy was booming and conditions allowed for more and more of everything from medical, dental, disability insurance and a higher standard of living. The concept of retirement was becoming a reality, and employers offered Defined Benefit plans to provide guaranteed income in our golden years.

But think about it. That lasted for one generation, the generation of Americans who grew up during the Depression era, thorough WW II, and into the prosperous 1950’s and 60’s. We baby boomers, who were raised by these parents who experienced such troubled times in their youth, saw our parents being rewarded so significantly in their retirement years. We wanted a piece of that, too, but things have changed, yet again.

Right when the baby boomers were getting ready to retire, starting in 2011,  not only have we seen a health insurance crisis, but we are in the middle of our own depression, recession or whatever you wan to call these tough times that began around 2007. Defined Benefit plans are all but gone, and the concept of benefits has changed significantly. Some think of it as an entitlement, others call it a right, but the reality is no matter what you call it, you must call it expensive.

So how do I get my cake and eat it, too in this new environment? How can I drive my Cadillac on a Ford Budget? First, we must change the way we think. We have to adjust our expectations, because this isn’t the 1950’s, and we may never see a society thrive as we did during that time of prosperity for so many. We were on the right track, we saw a strong positive move in civil rights legislation, science and technology was just getting started, and Social Security, Medicare and Medicaid were changing the standard of living for so many.

Benefits today have become one of the biggest expenses to a business, second to payroll. Employers struggle to keep the benefits at a robust level to attract and retain employees. But there are creative solutions, mostly in the form of wellness, and strong and effective communication. By helping employees understand what they have and why they have it, employers are beginning to make some inroads to reduce costs. Employers are considering everything from plan design changes like adding High Deductible Health Plans and Healthcare Savings Accounts, HSAs; to taking the measured risk of partially self-insured plans and captive insurance contracts. The focus is to design plans and manage the claims as much as possible, with the goal of flattening the annual trend curve from 10%+ to normal inflation levels of 2 or 3%. This will have a favorable impact of time, and will create a new culture and philosophy within an organization. This philosophy will shift from an employer providing a “sick” plan, to a health plan.

Today we need to focus again on what we need, not what we want. Take a lesson from those who lived through the Depression, WW II and learn how to appreciate that we may not be able to have it all.   What we can have is a life free from oppression, and full of opportunity, because we live in the great country in the world.

Learn more about how Wellness and Captives can change the equation for your company. Go to

Have a Happy and Blessed Thanksgiving!

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