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Unraveling the Intricacies of Health Insurance: Rising Costs, Mergers and Strategies: Part 2 of 2

December 14, 2023

Get set to untangle the intricacies of health insurance with us and our esteemed guest, Matt Usher. We promise you a guided tour through escalating out-of-pocket maximums, specialty medication costs, and their implications on the affordability of health insurance plans. We shed light on why employers need to consider alternative plans to lessen the financial strain on employees. Moreover, we analyze the latest shifts in the health insurance industry, such as the Humana / Cigna merger, and what they mean for the future of health insurance in businesses.

Brace yourself for an insightful ride into the pulsating world of health insurance, with a special emphasis on the industry’s recent mergers stimulated by the competitive prescription benefit management market. Tune in and increase your knowledge about how the Biden administration might influence these mergers. We also present invaluable advice for both employers and employees on how to evaluate their plans, comprehend the market they’re dealing with, and become smarter health care consumers. Our discussions on the significance of self-funded arrangements and the power of making informed decisions about where to seek care serve as potent strategies to save money for everyone involved in the plan. This episode is a perfect opportunity to arm yourself with the understanding needed to confidently navigate the health insurance market.

Guest: Matt Usher, Employee Benefit Consultant, W. Ray Williams & Associates Inc.

Matt started in the insurance business in 2006 with a specific focus on Employee Benefit plans. In 2008 he moved to Savannah, GA to start as a benefit consultant at W. Ray Williams & Associates, where he remains today. He has worked with businesses from 2 employees up to over 1000 employees. He lives on Skidaway Island with his wife and 2 daughters and enjoys spending his free time in the boat.


Aaron Higgins: 0:15
Welcome to Beyond the Stethoscope Vital Conversations with SHP. I’m your co-host, Aaron C Higgins. Today is part two of the conversation that Jason Crosby and I had with Matt Usher. Today we finish up this interview with a whole host of topics, including how specialty medication is making it harder to keep plans affordable, how the out-of-pocket maximums seem to be going crazy and a little bit about the Humana / Cigna merger news. Then we gaze into the crystal ball a little bit to see what the future may look like for businesses looking to offer fair plans to their employees. We hope you enjoy this vital conversation with Matt Usher. We’ve seen a lot of increases on out-of-pocket maxes. Right, the OPs seem to be going higher and higher. We have the HSA plans and we’ll speak from SHP’s perspective. We have an out-of-pocket max of, I think, 3500 for individuals, 7000 for families for in-network and then double that for out-of-network. That’s only gone up. When I started with SHP it was 2000 and 4000, and it’s just continued to creep up. We’re seeing that continue to rise, based off of even the plan level our bronze, silver and gold plans. How should both the employer and the employee assess these OOP maxes, which I guess the lower the plan, the higher that out-of-pocket. I think some of the ones that we evaluated have that out-of-pocket max starting at 8000 for the individual. That just seems insanity to me. What should employers be doing about this? What can they?

Matt Usher: 2:05
Yeah, the indexed out-of-pocket maximums were, in my opinion, one of the worst parts of the Affordable Care Act. I know that there’s a lot of parts to that, but when the Affordable Care Act came out, it said your plan has to be gold, silver, bronze, platinum, whatever that may be, but the criteria for it to be gold, bronze, silver, whatever it may be that number is going to change every year. That created this indexing of out-of-pocket maximums, which really went from $6,000 back in 2014 to now we’re at $9,450. That’s the max that it can be for 2024. It makes me want to puke, to be completely honest with you, because if you take someone who makes $40,000 a year and their plan has a $9,450 out-of-pocket maximum and they have a major medical expense, occur that’s 25% of their income is being spent to cover that major medical expense. All the while they have a silver plan and they think they have good coverage. What we’re trying to do at the employer level is get them out of the arrangements where you have to have these metallic level plans. That’s step one. If you can step out of these ACA rated or fully insured plans, then it opens the door to where we will have lower out-of-pockets I’m not going to say significantly lower, but a more reasonable one like $4,000 or $5,000, would be a lot better than having an almost $10,000 out-of-pocket maximum. There are solutions that exist to bring that down so that you’re not really crushing your employees when they have that major medical event At the employee level. I think it’s really important that people focus on that number. I am on the other side of open enrollment meetings so we get the questions about how much does this cost per paycheck, or what’s it going to cost when I go to the doctor, or how much is my prescription going to cost? We’re talking about all of these little day-to-day expenses, which I’m not discounting the fact that they can be expensive, but health insurance is moving away from covering all these little day-to-day expenses and is really there for that catastrophic care. They’re focusing on a $50 co-pay or $100 co-pay. I want them to focus on the out-of-pocket maximum so that they understand even if I have this really great plan, if something major happens to me, I’m going to be paying that out-of-pocket maximum. We spend a lot of time getting them to look into it and understand how the dynamics of how do you get to that out-of-pocket maximum, because a lot of people still don’t understand that as well, and I get it. Insurance is made to be complicated. But when I’m trying to coach someone through their open enrollment or benefit options even friends that aren’t clients of mine we break it down, starting with that out-of-pocket maximum, so that they understand hey, this is your true exposure. You really have to compare that from plan to plan and try and determine is the premium that you’re going to save out of your paycheck, does it offset that higher out-of-pocket maximum?

Aaron Higgins: 5:29
Yeah, no doubt. And even even from a consumer standpoint, understanding in network and out of network and how that’s going to affect your out of pocket too. You know, if you have a favorite provider that’s out of network and you’re going to them, that’s not going to affect your in network at all. And so you may be putting $5,000, $6,000 towards you out of network and you haven’t even scratched your in network. So that’s important for people to understand that if you like your doctor, you can keep your doctor. You just may have to pay more for it.

Matt Usher: 6:06
Yeah, what makes that even worse is when people really understand how the out of network works, because a lot of people think to your point, I paid $5,000. I should have $5,000 applied to my out of network deductible or out of network out of pocket. Their heads literally explode when they realize that the amount that gets applied to that out of network deductible or out of network out of pocket is what the insurance company would have paid in network arrangement. So if your $5,000 would have been negotiated down to $1,500, then that’s $1,500 is the only $1 amount that’s getting credited towards that deductible or out of pocket. And that’s a really tough spot. It’s tough for people to wrap their heads around it because you don’t know what that number will actually be. You just know what you’ve spent. But we’ve seen situations where the difference in what the member has paid for a service and what the provider actually pays for in network care is significant. I mean, on anesthesia it’s almost 10 times You’re paying $300 for a service that maybe the insurance company pays $30 for. That’s also a very common out of network issue that we run into. So it’s easy to kind of reference that, but it’s difficult to keep the doctors that you want and still have some sort of keeping track of your finances and making sure you’re not spending a ton of money on that care. It makes it really challenging.

Jason Crosby: 7:43
Matt, you touched on HSA’s earlier in the conversation and here we are trying to now talk about how to alleviate some of the burden on the employee and consumer. So touch a little bit first, I guess, on what you’re seeing with HSA’s, which we’re blessed to have at SHP. It’s been, we’ve got that and that’s certainly very, very helpful. But what I’m caught off guard a little bit is with the individual coverage that the ICHRA’s, which you don’t seem to hear about as much as I would expect to, as they get off the ground a few years ago. Maybe touch on as well why that is, or maybe we’re just not seeing that trend and what you’re seeing in the market on the ICHRA side.

Matt Usher: 8:24
Yeah, so the HSA part. One of the things that our agency has has done very well is we’ve had HSA plans in place for as long as they’ve existed. Many of our clients just adopted them early and it’s been really funny to watch that market because back in the day and HSA was either a 2000 or $2500 deductible and it was 100% coverage after that deductible and those plans were typically about 50% less than the comparable, you know copay plan or even a $5,000 deductible copay plan. What happened is sick people started to realize that the HSA plan would save them a ton of money and the insurance companies started to really lose money because people were electing the HSA not from a consumerism play, from a straight hey, I’m going to save 50% on my premium and I’m going to actually pay less over the course of the year to get my care, and if I want to open up this account I can also get some tax benefit to it as well. So insurance companies have really priced HSAs to be not as competitive as they were five years ago, 10 years ago, which has made it challenging. Additionally, the indexing of those out of pocket maximums. Those HSA plans had lower requirements for the out of pocket maximum. So as the traditional market was moving up towards that $9,450 out of pocket maximum, these HSAs still had a $7250 or $7450 out of pocket maximum. So, even though there was a lot of skin in the game for the employee because it is an HSA plan, the total risk was actually less than a comparable plan and the insurance companies had to price for that. So it’s been difficult because you guys have long had HSA plans and many of our clients have, and now they’re not. They’re not exactly the least expensive option in the market, but you’ve grown accustomed to that model and they do work long term, even at the member level. So it’s difficult to keep that going, but we are finding ways to continue to make them appealing. Part of it is also at the employer level. I think getting the adoption of an HSA plan to your full spectrum of employees is you got to give them HSA money. You really do. You have to give them some way to help start saving, you know in that help savings account, so that they can understand hey, we’re going with maybe a different style plan, but we’re going to give you some money to help offset some of the expenses that you are going to incur versus a traditional plan. So that’s the other piece of the puzzle is making it be affordable at the employer level and the employee level, but then, from the employer’s perspective, making it be attractive to the employee, and that’s by throwing some money in the pot to help them start that help savings account. The other piece that you that you mentioned is the the individual coverage health reimbursement arrangement, which commonly referred to in the market as Icarus. Icarus have been very popular and other markets for instance South Carolina, just right across the border They’ve been running with Icarus for two, three years. As soon as they came out in the market, a lot of employers adopted that type of model. But we’re sitting here in Georgia and we’re just not seeing it take off. Now, if you talk to the Icarus vendors, they are getting ridiculous amounts of growth because they’re starting from zero. Right, each year they’re growing by maybe 30 or 50%, which sounds like a lot, but we’re just not seeing it hit in the market like we thought it would. I think it’s a great concept and just to kind of help understand what an Icarus is, an Icarus would allow an employer to say look, we’re no longer having a quote unquote group health insurance policy Instead of having this group policy. We’re going to give you a certain amount of money each month and you’re going to use that money to then go out and buy your own individual coverage plan. So the benefit to the employer is it takes them out of what we call kind of the rat race of having to deal with these increases each year. And I just wanted to point earlier about analyzing plans, having to sit there and go through a whole bunch of plans and hopefully pick the right plan or plans. You know two or three plans for 30 or 50 or 500 employees. Now you’re giving the employee money and saying, look, you go out and buy the plan that best suits you and it’s very appealing. The reason that it hasn’t taken off in Georgia, in my opinion, is because the networks for those plans, their garbage. The individual plans in Georgia they are all HMO networks. They’re all state based HMO networks. So even if you know a big name insurance company has an HMO network in another state, you’re not able to access that. You have to stay in your home state and that’s a big negative because we’ve been accustomed to these big national networks and not having to lose providers and change providers. That’s, that’s one big obstacle. The other obstacle is going right back to the, the high out-of-pocket maximums. The individual market is designed to appeal to low-income people that would qualify for a premium subsidy. A lot of those plans Average level silver plans have a six thousand or seventy five hundred dollar deductible, which just isn’t really comparable to the traditional, you know, employer sponsored plans which might have a twenty five hundred or thirty five hundred dollar deductible. So that that’s also another challenge. Now I Do believe that they are going to continue to have this thirty to fifty percent growth a year over year and they will be Attractive in our market at some point. But part of that is going to be either because the small group Insurance market becomes unaffordable For employers to continue to maintain going back to that fifteen or twenty percent year over year. If that just keeps going they’re gonna run out of runway and they’re not gonna be able to continue to offer that. So that may be one shoe that would fall. The other is the networks. If they could improve the individual market networks Then there would be greater adoption of those ICHRA models.

Aaron Higgins: 15:28
Okay so, matt, recent headline here is that Cigna and Humana are looking at merging together. So what’s your hot take on that?

Matt Usher: 15:37
So my thoughts on it are First, you kind of have to understand why Humana exited the, the commercial market which, if you’re not aware, Humana exited the commercial health insurance market, which means that they don’t sell Health insurance anymore to individuals that are under the age of 65 and they also don’t sell health insurance to businesses anymore, so that that has occurred in the last year, shifting their focus to, you know, Medicare, which they already had a presence in Medicare. So what I’ve read thus far, it seems like the whole signal deal with Humana is Cigna doesn’t really have a strong presence in the Medicare market. Humana does. Then the benefit from Humana, looking at Cigna, owns their PBM, which you know, express grips, which was another challenge and another reason why I think that Humana left the commercial insurance market. Where all these insurance companies are making their money now is Through the prescription benefit management companies that they own. So Humana did not have that and I feel like they were feeling the pain and not being able to compete with, you know an anthem, or Elements, as they call themselves now, or united healthcare, which owns optum, you know, obviously, cvs and etna right there together. So they were competing against competitors that controlled their pharmacy market, which is aware of a lot of the income comes from now, and they didn’t have that piece. So you know, still peeling it back. But to me that’s kind of what it seems like when you look at the mergers of insurance companies. A lot of it is for that government business. So if a company has a lot of Medicare enrollment or a lot of Medicaid management, you know they’ll. They’re attractive, right, because that’s a profitable piece of business. So that was always one part of the merger process that we saw. But this prescription benefit management has become so Prevalent in the last couple years that that’s the other attractive piece and it’s like you got to have one or the other or you’re just not going to be able to keep pace with with the companies that do.

Aaron Higgins: 17:57
Right, it’s the whole vertical integrated thing that they all seem to be chasing. That even the likes of Amazon and Best Buy seem to be pursuing, too, is build these vertically integrated networks so they’re cradled, aggrave, literally throughout your whole life, giving you all your healthcare needs. So it makes sense. That’s a good explanation. I’ll be curious, though, to see if the Biden administration actually approves the merger. They’ve indicated they’re not terribly hot on these healthcare mergers happening, so I guess that’s the real key.

Matt Usher: 18:30
Yeah, doj, let it happen. Right. I mean it’s funny. You know they’re not keen on it yet they still are occurring right, and so it’s just it’ll be interesting to see how it plays out.

Aaron Higgins: 18:42
Wrapping up here as we head into 2024. I think by now, everyone has already picked their plans for 2024. It’s a little late if you’re just getting started, so we need to be looking forward a year ahead now. So what are, what are tips and tricks to help employers and maybe employees and consumers too, as they do look forward a year from now, going into 2025, to better assess the plans? I know we need a little bit of a crystal ball because things could change over the next year, specifically on the state levels, but maybe as a whole, what should they be looking for?

Matt Usher: 19:19
I think the first thing an employer needs to do is they need to understand what market their coverage is being purchased in right. Is it a fully insured plan? Is it an ACA market, community rated market? Are we level funded? Are we partially self-funded? Are we risk rated? We see businesses spend a ridiculous amount of money for health insurance but not, at the surface level, know where they’re actually buying that health insurance. They’ll know the insurance company. They may know the funding arrangement, but do they really understand why? So a big thing that fully insured companies can do so. If you have a fully insured plan right now is really now you have the time to kind of remove the numbers from the equation. You’ve already done your renewal. You know what you have for 2024, but let’s talk high level at. What other solutions could benefit your company and why are we not doing that right now? Maybe we have a lot of specialty medications. What obstacles are preventing us from taking one of those strategies right now and how are we going to use the next 12 months to eliminate that obstacle or maybe make it a much smaller speed bump in the road to moving to one of these partially self-funded arrangements, because ultimately you’re going to need to be in a self-funded arrangement if you really want to have any control over the future of your company’s health care spend, and that doesn’t matter whether you’re a two-person group or a 25,000 person group. You don’t have any control until you can actually see what’s happening behind the veil on how your plan is actually being used from your employees. I think the other piece is at the member level. It’s being a better consumer of the actual care that you receive. Paying a little bit more attention to what certain things are costing the actual insurance company or your plan, I think gives you a better idea of the actual impact that you’re making as a part of your team. I think employees and members need to understand we’re all in this together. We’re all kind of on the same boat, and when you move into one of those self-funded arrangements, that’s even more and more important. So it’s not hey, don’t get the care that you need it’s. Let’s take a few moments to understand is this the best care for me? Is this the most affordable way to receive that care, and will it have a negative impact on the business as a whole or my fellow coworkers by the way, of having significant claims incurred and that’s really difficult for someone to do, but if you just kind of pay attention to the EOBs that you’re seeing for the care that you receive, you can see what you’re paying. But you also see what the insurance company is paying and it gives you a better idea of what that total spend is. A lot of it’s very simple, simple questions. Oh, I have to have a surgery All right, doctor, does that have to be done in the hospital or can we have it done at a freestanding facility? Oh, I have to have an MRI All right, well, does that have to be done at the hospital or can we have it done at an imaging center? It seems really simple for someone like myself and probably you know both of you because of the business that we’re in but a lot of people don’t ever think to even ask that question. The more care that you can receive outside of the hospital, the more money you will save and the more money the plan will save. And I think that’s a concept that people are starting to grasp and the way that I like to help those members kind of understand that is we just went through COVID. Right, all the sick people are in the hospital. So even at the very basic level. If you need to have an MRI done, you’re going to go check in the hospital. You’re going to be at the pre-registration, you’re going to go sit in a waiting room. You’re going to maybe sit and wait after the MRI if they had to give you some type of sedation or something. Generally, you’re in a room with a lot of other people, you’re in a hospital, so that everyone in there is sick, right? So any step that you can do to kind of avoid that interaction is going to keep you healthier, because you might pick up something while you’re in the hospital and at the end of the day, it wasn’t really necessary for you to have that care rendered in the hospital setting. So you know that’s a very basic thing to do, but people don’t think about it going down to this simple hey, pharmacist, is there a cheaper way to get this medication? Or, doctor, is this the best medication for my condition? Or is there something else that we may be able to do to help Help me financially, but also help me holistically get better?

Jason Crosby: 24:19
Great input. Well, say what. We’ve come to the end of the hour here. Great information, even better conversation, matt, I’m sure the listeners will find all this information useful and hopefully applicable to their organizations in just their daily lives. We appreciate your time and joining us today. You’ve been helpful to us as employees, one on one, as a group, as Aaron has mentioned so I think others would be better off reaching out to you as well, and again for those that are active on LinkedIn, you’ll find Matt with some of those useful three minute, five minute type of educational videos. I would highly encourage you to reach out and do that, and thank you again to our listeners for your time. We look forward to our next podcast and till then, everybody, have a great rest of your day. Thanks, Matt.

Matt Usher: 25:07
Really enjoyed it.

Jason Crosby: 25:12
You’ve been listening to Beyond The Stethoscope, Vital Conversations with SHPB. This has been a production of Strategic Healthc are Partners.

Aaron Higgins: 25:20
Your hosts are Jason Crosby and me, Aaron C Higgins. This episode was produced and edited by Nyla Wiebe.

Jason Crosby: 25:28
Our social media content producer is Jeremy Miller, the transcriber is… me, and our executive producers are Mike Scribner and John Crew.

Aaron Higgins: 25:36
For more information about SHP, the services we offer, including the back library of episodes, episode transcripts, links to resources that we discussed, and much more, please visit our website at shpllccom. Thank you for listening.

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