In last week’s blog, Seeking Truth in Health Care (Part I), I shared four observations regarding health insurance for Iowa employers. This blog continues the discussion about how this may impact the health care provider community in Iowa.
As reported annually from the Iowa Employer Benefits Study©, health insurance premiums continue to skyrocket, which erodes take-home pay for employees, especially those who fall below the 400% Federal Poverty Level. In addition, employers continually purchase higher cost-sharing health plans that require employees to assume more out-of-pocket expenses. All of this means that health care providers – hospitals and physicians alike – will continue to see inflated receivables from individuals in the private payer sector. Not only is this unsustainable for the employment market, it will create greater financial tension for health providers when attempting to collect the cost-sharing portions from employees.
The wellness culture is taking root, as the emphasis in the employment community is all about healthy and productive employees. This new transformation in wellness can be seen not only with employers, but also in communities and statewide, as witnessed by the Healthiest State Initiative and the Blue Zones® Project. Many smaller Iowa employers have yet to embrace wellness initiatives, but appear to be willing to do so – as they are looking for both assistance and direction to make this process easy to implement and maintain. With this, opportunities to partner with employers exist for health care providers. Developing sustainable business models will be paramount for such opportunities to flourish in the new health world.
Another implication that will likely impact health providers is the concept of ‘defined contribution’ (DC.) As health premiums increase, employers will look for obvious ways to limit the ‘distraction’ of offering their own health plan(s). One possible and likely approach is to provide employees with a flat subsidy (that might be tied to the Consumer Price Index) to purchase their own coverage through a private exchange.
It is my understanding that an employer offering access to a private exchange (and providing “adequate” subsidies) would be similar to offering health coverage and therefore not be subject to the $2,000-per-worker penalty under the Patient Protection and Affordable Care Act (PPACA) for employers with over 50 employees. The DC approach may intensify improved efficiencies, price concessions, access and convenience – as employees would become more astute to the true cost of insurance…and demand more information from health care providers. As a result, health providers will need to transform themselves to be more efficient due to increased pressure to be transparent both in cost and outcomes.
Finally, most Iowa employers believe that health reform will NOT solve the cost issue. Greater complexities in the insurance market will only serve to frustrate employers who look for new directions on how to manage the cost and uncertainties. A ‘Provider Renaissance’ is sorely needed to deliver higher quality care at lower costs. Without a doubt, disruption in health care will be painful for all.
There you have it. The above implications are my best guess – at least for now!
Next week’s blog will address the potential “Winners” in the future – and what it may eventually mean for the employer community.
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