Payers weigh in on Cadillac tax, digitization and more for 2016
The year ahead is expected to bring some unique challenges, as well as the continuation of numerous trends already begun since the implementation of the Affordable Care Act.
A variety of industry stakeholders shared their views with Healthcare Dive. Among the common threads were thoughts about the pending insurance industry mega-mergers; strategies regarding the Cadillac Tax scheduled for 2018; the “private exchange” concept; and consumer-driven plan initiatives.
Here are some of their takes:
Steven Shill of The BDO Center for Healthcare Excellence & Innovation, on his 2016 outlook:
- Commercial payers will consider following CMS' lead by disincentivizing treatment at hospitals, nursing homes and home health agencies with fewer than 3 stars.
- Health insurance companies will see fundraising rounds taper off, even though the majority of private equity activity the past five years has involved health insurance.
- 2016 could be the year of regulatory mandates for health insurers. After seeing Anthem and Premera Blue Cross experience cyber breaches exposing over 90 million records, the National Association of Insurance Commissioners will need a concrete means of enforcement.
- FTC-prompted spin-offs could create a second coming of middle-market health plans.
Zack Pace, senior vice president, benefits consulting at CBIZ, projects the following trends in 2016:
- As a result of continued national health insurer consolidations, demand will build for the re-emergence of regional insurer options, perhaps offered by regional health systems.
- Among employers with 50 – 250 employees, in an effort to lower ACA and state premium taxations, interest will move away from fully insured health plans to self-funded plans with individual and aggregate stop loss, including so-called level funding products.
- If the Cadillac Tax is not repealed before the end of the year, employers will continue to plan, not without angst, whether benefits reductions should be made incrementally leading up to 2018 or should be deferred until 2018.
- Continued interest and moderate adoption of the “private exchange” concept, without consensus being formed of what that concept precisely means.
Vincent Vieni, senior vice president of sales and strategy at GFI Insurance Brokerage, sees these trends likely to occur in 2016 and beyond:
- Employer healthcare costs will likely come in slightly lower than what we’ve seen this past year, dropping from just over 7% to around 6.5%, due to various cost management strategies being employed by larger carriers.
- The continuation of this trend beyond 2016 is somewhat uncertain, however, due to the continued consolidation in both the provider space and among insurance carriers, which over time could cause an uptick in pricing, depending on who wins the game of leverage between insurers and providers.
- Reduced plan designs are being considered by many employers with rich benefits packages in order to avoid paying the 40% excise tax, also known as the “Cadillac tax.”
Elizabeth Hart, healthcare principal at Pegasystems, sees 2016 as “The Year of Impactful Consumer Engagement”:
- Healthcare and consumer technology trends have been on a convergence path for several years. Whether you consider health insurance exchanges offered electronically by governments or employers, biometric monitors like fitness trackers or web-based telehealth applications for everything from blood glucose management to cardiac care supervision, technology has changed the context of consumer engagement within the healthcare system.
- Just as brick and mortar retailers have largely been left behind due to consumers shopping on their computers, traditional healthcare organizations must modernize their consumer engagement models to gain and maintain their consumer mindshare.
- In 2016, a digital presence that enhances customer relationship management is a key element of every healthcare system.
Tariq Hilaly of Lumity on the biggest trends and positives for health insurance in 2016:
"One positive we see for 2016 is that people are beginning to realize that, thanks to the ACA, their out-of-pocket costs are limited. At the same time, it is a challenge to come up with $6,300. If an employer can save money on the insurance premiums through a HDHP, they are often happy to contribute to the HSA so the employees feel more confident in their ability to meet their medical costs. When this strategy is used correctly, everybody wins: the employees are happy, and the company saves money.
"As for challenges, we see for 2016 the exchanges will continue to struggle with carrier participation and competitive rates. [In addition,] healthcare costs continue to rise, and that is both a trend and a challenge. The trend is moving towards higher employee cost sharing which is spurning more and more consumer-driven healthcare and health plan initiatives. As a result of rising costs for both employers and employees, we’ll see a move towards higher deductible plans for young, healthy employees - educating them about health insurance and health savings accounts."
Paul Johnson, co-founder of Redirect Health, which provides businesses with an alternative to traditional health insurance:
- Businesses will look for alternative and innovative solutions that will help them reduce their overall costs. More employers will turn to self-insurance as a mechanism to assist them complying with the law and lowering their healthcare costs.
- Stop-loss insurance will become a growing market trend; it will serve as an alternative to a fully insured plan.
- Companies that provide solutions for employers that remove confusion, offer transparency, improve healthcare and dramatically lower costs will see an increase in their market share.
Anand Natampalli, MBA, vice president of global business development at HGS, says the biggest trend in the market right now is outsourcing:
Many health insurance organizations are seeking to augment their sales teams in order to meet increased direct-to-consumer sales. Normally, this would require leveraging an ineffective “staffing-up and staffing-down” approach. However, to successfully adapt to the cyclical nature of the market, more insurance organizations are opting for business process outsourcing.
Seth Ravine, CRO of Acclaris:
"In 2016, the biggest challenge for payers will center on how and where to find growth in the marketplace. As payers look to expand market share and compete at a consumer level, they will need to figure out the right approach to education, building their brand and pricing. In the new consumer driven world, insurers can’t simply sit and wait in the hopes that the healthy population will enroll, meanwhile sustaining losses. Payers need a strategy that builds loyalty across all segments and manages an individual at all phases of the their lives. They must be able to compete and build a true consumer experience, but of course do so in an economically responsible way."