"But for employers to address the inadequacies of this system there must be accountability and that can only happen when employers recognize that they have all the leverage in crafting their health benefits."
Employers do have leverage, and a lot more than they think they have, but not "all" of it. As I'm sure you're following in January the Dept of Labor launched a lawsuit against BCBSM {Blue Cross Blue Shield MN) alleging it over-stepped its authority as TPA of self-funded plans; whatever the merits of the complaint the allegations describe a situation in which the plans ceded most of their authority to BCBSM, though it's not clear to me the extent to which the plans might have formally delegated the authoriity by contract versus BCBSM possibly exercising de facto authority. There are also a number of self-funded plan actions around related issues, for example a couple of cases against Anthem (Bricklayers, a class action and Owens Minor, settled).
I do agree that in the final analysis employers which bear the financial risk should have the ultimate leverage, but recognizing and realizing that authority is at least not common.
Thanks for raising an important but uncommon topic!
We honestly don't know how much leverage employers have, but we can agree they have a lot more than they are using. Health plans have become comfortable assuming they can do pretty much anything (as long as it doesn't cost them a customer), and will ask for forgiveness later. Sometimes they might get sued, but they figure that is the cost of doing business. I fear the real problem is the lack of expertise in plan sponsors, ie they don't even know what to ask for.
I've been looking for a good overview article on Substack on employer-based health insurance--thank you!
There's one key problem with employer-based plans you don't mention: the time misalignment of incentives. As we switch plans yearly, the insurer has an incentive to minimize care *this year*--instead of helping the insured stay healthy for the long term. I think that is in part why we don't have "healthy living" discounts or incentives--as compared to car insurance, say, which offers safe driving discounts.
True. This is what I was referring to when I discussed churn. The most glaring recent example was the treatment of hepatitis C which is curative but when introduced was crazy expensive (72K for a single course of therapy). When the price came down all the insurers got onboard. But that was easy because it was possible to quantitate cost savings. For other programs the math is tougher (like the healthy living programs you mention) and so is the sell to the employers. Interestingly, these types of programs are commonly offered in Medicare Advantage where there is much less churn (more on that in my next post). Thanks for commenting!!!
I think you overstate employers' power here::
"But for employers to address the inadequacies of this system there must be accountability and that can only happen when employers recognize that they have all the leverage in crafting their health benefits."
Employers do have leverage, and a lot more than they think they have, but not "all" of it. As I'm sure you're following in January the Dept of Labor launched a lawsuit against BCBSM {Blue Cross Blue Shield MN) alleging it over-stepped its authority as TPA of self-funded plans; whatever the merits of the complaint the allegations describe a situation in which the plans ceded most of their authority to BCBSM, though it's not clear to me the extent to which the plans might have formally delegated the authoriity by contract versus BCBSM possibly exercising de facto authority. There are also a number of self-funded plan actions around related issues, for example a couple of cases against Anthem (Bricklayers, a class action and Owens Minor, settled).
I do agree that in the final analysis employers which bear the financial risk should have the ultimate leverage, but recognizing and realizing that authority is at least not common.
Thanks for raising an important but uncommon topic!
We honestly don't know how much leverage employers have, but we can agree they have a lot more than they are using. Health plans have become comfortable assuming they can do pretty much anything (as long as it doesn't cost them a customer), and will ask for forgiveness later. Sometimes they might get sued, but they figure that is the cost of doing business. I fear the real problem is the lack of expertise in plan sponsors, ie they don't even know what to ask for.
I've been looking for a good overview article on Substack on employer-based health insurance--thank you!
There's one key problem with employer-based plans you don't mention: the time misalignment of incentives. As we switch plans yearly, the insurer has an incentive to minimize care *this year*--instead of helping the insured stay healthy for the long term. I think that is in part why we don't have "healthy living" discounts or incentives--as compared to car insurance, say, which offers safe driving discounts.
I wrote about that here: https://heikelarson.substack.com/p/why-is-there-a-safe-driving-discount
True. This is what I was referring to when I discussed churn. The most glaring recent example was the treatment of hepatitis C which is curative but when introduced was crazy expensive (72K for a single course of therapy). When the price came down all the insurers got onboard. But that was easy because it was possible to quantitate cost savings. For other programs the math is tougher (like the healthy living programs you mention) and so is the sell to the employers. Interestingly, these types of programs are commonly offered in Medicare Advantage where there is much less churn (more on that in my next post). Thanks for commenting!!!