By Molly Mulebriar
Amazing things happen when out-of-the-box risk management strategies are applied to health care financing. Here’s a text book example of what things can be vs old fashion status quo health plans that are doomed to failure.
The Mark
A 500 life group medical plan is fully-insured with Blue Cross of Texas. The employer offers three plans. The Base Plan is a high deductible plan with no first dollar benefits. 60% of plan members are on the Base Plan. The next two plans have the usual first dollar coverage with co-pays here and there for this and that. The best of the two plans has a $3,500 deductible. All have high maximum out-of-pocket exposure.
The current Base Plan rate is $303 pepm. Not bad!
But most employees can’t afford to use their health plan. Who has a spare $5,000 these days?
The Challenge
The Blue Cross claims experience indicates a 100% loss ratio. Who knows if this is true or not. We know fully-insured plans have an internal pooling point. Were large claims pooled out or are they included in the claim experience report? We have seen that happen in the past. A clueless client has no idea their 100% loss ratio is really an 80% loss ratio when large claims are pool out.
Underwriting Blue Cross groups is hard to do because no one believes the numbers. It’s fuzzy math and underwriters know that. They must be conservative which puts them at a competitive disadvantage.
But underwriting is not limited to numbers. There is a whole lot of other factors to the equation including risk management experience, knowledge of local markets, and intuition. Keeping up with market resources is vitally important.
We found this prospect to be an interesting challenge.
The Hail Mary Approach
Politically we don’t have a chance in getting the case, but we thought it would be fun to try anyway. We immediately saw opportunities the current broker missed.
We developed a proposal eliminating all financial barriers to health care giving all employees, for the first time, affordable and easy access to health care. The plan is level funded but structured differently than a traditional level funded plan. It’s structured smarter and better.
Rating basis is below current. Members who play by the rules have zero out-of-pocket expense.
Partnering With Thought Leaders Makes a Difference
We didn’t do this alone. It took a team. The lead is from Austin, Texas. He has always been a man before his time. In the 1990’s he was structuring Reference Based Pricing plans before anyone else. He initiated Canadian drug importation strategy 30 years ago in partnership with a Texas pharmacist who was the subject of a Wall Street Journal article that caught his attention. And he has done some other amazing things too numerous to mention here.
Proposals are due today. The current broker has everything to lose and nothing to gain. We have everything to gain and nothing to lose.
We’ll see what happens………………..
