In any given population a minority drives costs for the majority. All are not equally sick.
The sicker one is the more their health care needs are. These poor souls buy the best health insurance they can get. The majority don’t need the same coverage and they tend to buy less coverage for less cost while still retaining protection against catastrophic health care episodes. Isn’t that what health insurance should be all about?
According to Zorro’, an ICHRA administrator, 2023 plan statistics show 4% of employees choose the platinum plan, 33% gold, 28% silver, and 35% bronze.
This means about 40% pick high value plans while 60% pick less value plans. High value plans have lower deductibles, as low as $0, and more first dollar coverage than less value plans which can have deductibles of $5,000 and more with less first dollar coverage.
Not all plans are HMO’s. (An HMO is simply a narrow network plan). Some are Point of Service plans and EPOs. None, to our knowledge, are PPO plans. All plans must meet federal network adequacy standards.
With flexibility no traditional group health plan can offer, ICHRAs are becoming more popular among increasingly frustrated plan sponsors who must operate under the sometimes punishing thumb of ACA bureaucrats.
A Texas school district recognizes the value of ICHRA. District employees will, for the first time, be able to enroll in coverage that best suits their needs rather than a one size fits all plan that’s traditionally been foisted upon them.
The district has capped their costs. They are now out of the health insurance business freeing up more administrative time and money to be better spent educating children.
Other Texas school districts would be wise to consider doing the same. We have provided financial feasibility studies for several school districts recently and the results are compelling. Annual savings are to the tune of millions of dollars.
ADDITIONAL READING:
Can Federal Funding Save Teachers’ Healthcare Insurance?
The Largest U.S. Commercial Health Insurance Risk Pool
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