Alternative Modles Of Health Insurance

by Lesley Politi on May 5, 2009

Alternative models of health insurance
By Sarah Cox

Faced with a growing problem—the uninsured and the escalating cost of health care insurance—two innovative programs have been introduced to combat and solve the dilemmas.


The limited benefit-health plan

Cigna HealthCare has tackled the plight of the working uninsured to help both the employees and their employers with a limited-benefit health plan that is low cost and paid by the employee (it represents about one to two hours of a weekly wage for the premium), and allows them to take advantage of doctors in the network, therefore getting reduced rates. It’s called Starbridge; its intent, according to Cigna Voluntary spokesperson Mary Fischer-McKee, is to provide the working uninsured access to routine and day-to-day health care. She says it is directed to those employees in high-turnover retail and fast food businesses that can’t get access to coverage.

The coverage includes wellness visits (physicals), routine mammography, pap smears and PSA tests for men, as well as sick visits, lab work, x-rays and CT scans. “We insure a fairly young demographic; these plans are never meant for long term,’’ explains Fischer-McKee. “We take someone and bridge them from having no insurance,’’ she says, to having insurance provided by the companies as they move up to supervisor and manager.

For employers, this type of insurance is a lure to attract good employees and keep them in good health. The high-turnover population’s concerns, she points out, are different than someone who has insurance for asset protection and could be wiped out with a catastrophic health situation.

“They want to protect their ability to work, which is their number one asset,’’ she says. For the working uninsured, their options are a public health clinic or an emergency room. The former, says Fischer-McKee, can be a source of further contagion, and the latter can take up an entire evening. With the Starbridge insurance plan, a worker can go to a participating doctor, pay a copay, and with the pharmacy card, have access to discounts and a copay.

There are three levels to the Starbridge plan—a basic plan, which is the least expensive; a mid-range plan for families; and a plan for the part-time worker who is working for benefits.

A Cigna study found that health insurance was listed as the eighth-highest financial priority for the working uninsured. But without plans such as this one, it can be financially prohibitive.


nHealth: the traditional health insurance model gets a makeover

Paul Kitchen found that health insurance, in general, is becoming a greater and greater financial burden to employers, and subsequently started his own health insurer, nHealth, with the sole purpose of reconfiguring what he says was a completely wrong health insurance model. Kitchen, who was executive vice president and CEO of the Medical Society of Virginia, says he realizes that the problem of health care costs does not lie with physicians but with the way health insurance plans are laid out. He asks why employers and employees were paying upfront in premiums for disasters that may never occur—premiums that run between $500 – $1,000 per month for a lot of small, routine things. “I began to look at what we insure, why we insure it, and how we can lower premiums; secondly, the ability to give us, the consumer, the cash to make decisions in health care.’’ His company, nHealth, presents a new approach that lowers premiums from 30 to 50 percent.

Becky Pollard, president and owner of Business Solutions, which brokers health insurance plans in the Roanoke Valley, says she can only describe employer reactions to Kitchen’s plan in one word: excitement. “This is the first time in a long time we have seen an insurance carrier coming into the Roanoke Valley with significant cost savings,’’ she adds. This plan is for businesses with employees of two to 500 and is being offered statewide. Pollard gives an example of three different area employers with whom she is in close contract talks. The first one is a two-person restaurant; she said she presented a health care plan that gives them $20,000 savings per year on premiums. The second, a 300-man group, would realize $250,000 savings; the third, a 25-man group, would save $50,000. “They are taking applications as we speak,’’ she says of the groups.

The plan is essentially consumer-driven. It restructures the payment process so that the employee—or, oftentimes, his employer—contributes to an employee’s individual escrow or health savings account with pre-tax deductions from the paycheck. The employee dips into this account to use it for doctor bills, prescriptions, x-rays and lab fees.

In contrast, the traditional model has the employer paying thousands for each employee and the employee pays a co-pay. There is no residual benefit of the premium remaining at the end of each month. Kitchen says his own company was the test group for this plan. “We reduced our premiums by 45 percent. We took that savings, invested $81,000 in our employees through direct contributions to their health savings accounts, and at the end of the year realized a total savings of what we would have paid under a traditional plan of over $46,000. Of that savings, $18,000 was realized by the company, and $28,000 was realized by our employees, who had an average of $981 left in their savings accounts at the end of the year,’’ he says. This amount rolls over to the next year.

He says that on the average, family premiums cost about $12,000 annually. In addition, families are spending approximately $2,000 out of pocket. “Our model says, we don’t cover the first dollar of every little thing that could happen, but in return, our premiums are 30 to 50 percent less. You take that savings and pocket that, and now you [the employee] own and control that money and can engage in decision making.’’

Kitchen says his employees, because of this consumer-driven approach, have exhibited behavioral changes. They have quit smoking, lost weight and in general become healthier. “We, the public, need to be more appropriately judicious about health care. I’m a big believer that employees are smarter than insurance companies. What health care is now, you pay this significant premium, what is commonly referred to as prepaid health care. What we are saying is, don’t prepay that $1,000.’’

There are two deductibles in this plan: one for hospital stays, drugs, x-rays and lab fees, and one for doctors. The nHealth business model is set up so that the insurance kicks in 100 percent once the employee reaches the deductible amount in their escrow account. The rollover amount can be used as a savings account, to be put toward future years and even retirement. It is their money.

Pollard says that this plan is in the Lewis-Gale HCA and physicians network, as well as the Carilion hospitals and physicians network in this area. Only time will tell whether these two innovative insurance models catch the eye and imagination of others in this challenged industry.


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