SCOTTSDALE, Ariz.--(BUSINESS WIRE)--American health care is at a crossroads. It’s clear the Affordable Care Act will change dramatically, yet it’s unclear what, exactly, those changes will entail or how repealing and replacing the law will affect businesses and individuals. Meanwhile, traditional health insurance remains a clumsy, exorbitant albatross.
In his “State of the Nation” speech Feb. 28, President Trump outlined four points that would support the fully insured market and government programs, including comments on preexisting conditions, tax credits, savings accounts, flexibility in Medicaid programs and a national insurance market place.
One missing issue: self-insurance, and specifically how employers use self-insurance under the Employee Retirement Income Security Act (ERISA). As it stands now, many small and midsized companies are using a self-insurance platform to improve innovation, increase service, and lower premiums and copayments.
One company that’s helping these employers leverage this platform is Redirect Health. According to the Employee Benefit Research Institute, more than 60 percent of the nation’s health-plan-covered workers are enrolled in this model. As a result, Redirect Health CEO Paul Johnson says any changes to ERISA will be a very big deal for small businesses – where the majority of Americans work.
"Taking control away from insurance companies and giving it to employers has done more to reduce health care costs than all the other reforms put together,” he said. “We gained some color on how the Trump Administration will change the law, and all signs point to fewer regulations for companies and the people they employ.”
Redirect Health is an industry disrupter that helps employers nationwide build affordable, high-quality health care plans using self-insurance as a platform. With this model, companies create their own benefit plans and pay claims directly. They can also work with a company like Redirect Health to design and administer benefits, and provide access to medical services. Benefits may include medical, dental, vision, prescription medications and workers' compensation. Many self-insured companies purchase stop-loss insurance to limit their financial risk in case of catastrophic illnesses or accidents.
Self-insured plans are almost universal among large employers, but the model can also help small and midsized businesses offer competitive benefits packages without risk to the bottom line.
“The way to cut health care costs is to release employers from the shackles of insurance companies, force hospitals and drug companies to be transparent with their prices and remove government regulations that stifle creativity,” said Johnson. “Self-insurance is a platform that allows companies like ours to transform the health care industry. We’ve found a way to drastically reduce costs without cutting quality.”
Companies that self-insure can cut costs in numerous ways:
- Owning Data: Self-funded companies have access to every claim, from prescriptions and primary care visits to ER usage and specialists. As the data grows, they can benchmark against industry norms, address red flags, mine the data for insights to better manage benefits, control costs and improve individuals’ experiences. Outsourced data management vendors can easily accomplish privacy requirements.
- Plan Customization: Not every company has the same human resource plan. A self-insurance platform provides a new way for companies to offer competitive benefits and retain their current workforce – all without drastic cost increases. Chances are that a one-size-fits-all, traditional insurance plan hinders recruiting and retention, especially for lower wage workers.
- Eliminating Costly Markups: Marketing costs, administration and profit margins that are built into traditional insurance are eliminated with a self-funded platform. The Self Insurance Educational Foundation estimates these cost savings at 10-25 percent in non-claims expenses.
- Less Taxes: Companies that self-fund health care receive exemption from state insurance regulations and premium taxes under the ERISA and many Affordable Care Act provisions.
- Care Navigation: A third-party navigation partner like Redirect Health can be contracted to guide employees efficiently through the system, ensuring they get the care they need, and directing them to appropriate sites of service. For example, many medical services are needlessly performed in hospitals, where the cost of care is five-to-30 times higher. An outsourced partner can direct employees to lower-cost (but equally good) sites of service, protecting businesses from overpaying while improving employees’ health care experiences.
- Less Workers Comp Claims: Some employees claim workers’ comp for minor injuries requiring only first aid. Others submit claims when they get hurt outside the workplace – simply because they don’t have other options. Strategic care coordination can help employees access care through more efficient channels. Likewise, organizations that benefit from better workplace safety measurements can lower their E-Mod scores, potentially making them eligible for winning more bids.
“The best federal policies will aid employers’ abilities to exit the traditional game and self-insure,” added David Berg, Redirect Health’s co-founder and chairman. “With a smart strategy in place, companies can offer better health care at much lower costs, gain a competitive advantage and level the playing field when it comes to attracting top talent.”
About Redirect Health
Founded in 2013, Redirect Health helps entrepreneurial businesses and their advisors build affordable health care plans on a self-insurance platform. Solutions comply with the Affordable Care Act, reduce waste and administration costs associated with many traditional health insurance plans, and enhance the employee’s health care experience. The company uses a process that quickly identifies the most cost-efficient route to address health care needs, enabling employers to significantly cut costs and reinvest savings back into their businesses. Visit redirecthealth.com.