Unintended consequences of Obamacare
There is hardly any good news coming from the Affordable Care Act (ACA); but, there is one positive phenomenon that can tangibly be attributed to ACA. The fear of penalties of Obamacare made employers nervous, rightly so. Until now, employers depend on insurance companies to be the stewards of cost containment, but this blind trust was undermined by the rising premium cost compounded by an incentive created the ACA to the insurance industry to raise cost. This might sound ironic, but, as 2012, medical insurance companies are restricted to cashing a maximum of 15% or less of the premium as profit. Lowering cost is counterproductive in the profit-margin formula.
In the last 2 years, the number of employers shifting from traditional insurance to selffunded plans has increased by as much as 30%. The employers realized that insurance companies exist, because they make a profit. It makes sense to self-insured employers to save the profit for themselves. It’s a no-brainer. In fact, historically, self-insured employers had in excess of 600 employees who were considered as full time. Now, we see some with as few as 100 or less who are considered as full-time employees enter into this cost-saving market.
The next thing that is shaping up the employers’ involvement is access to care, management of chronic diseases, and early detection of potential catastrophic illnesses through workplace clinics. This has proven to be the thing of the future. Substantial savings through workplace clinics have been proven by companies, such as Employers Health Care Savings (EHCS), and others; but, this process has a huge potential for additional savings through proper pharmacy negotiations and medical tests (i.e., blood work and imaging studies). Employers who we work with have seen so much savings and improved compliance that they have waived the out-of-pocket expenses incurred by their employees. I call this a win-win situation. It provides better care, easier access, better compliance, and significant double-digit savings. Employers working through this formula could care less about what the government is doing. They take charge of their own affairs. It is the American way, but should they thank the government for putting so much pressure on them. They are taking charge of their own financial affairs—difficult situations inspire ingenious solutions.