Employer health insurance is a misplaced responsibility

As health insurance costs continue to rise, employers are often deploying new strategies to control costs. From self-funding or captive insurance to direct provider contracting and direct primary care (DPC) for all, these new programs are getting them more into the health risk and healthcare management business. 

Many brokers have made these programs a primary focus of their business, while I believe most employers would prefer to be out of the risk business. Employers have enough to worry about running their businesses. Trying to manage the healthcare costs of their employees is simply a misplaced responsibility. 

One problem with having to manage healthcare costs is that many of the people for whom employers assume the risk don't even work there. They are dependents of employees. When you add into this equation employee turnover, as well as covering those on COBRA and working from home, it all goes sideways. 

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Employers have little control over the risk they are assuming when they hire someone and little control after they hire them. And when employers fail to manage these costs, they shift more costs onto employees, most of whom incur few medical claims at all. So, if by chance you work at a company with high claimants, you may be asked to fund your co-workers and pay more of the costs. 

In 2018, Amazon, Berkshire Hathaway and JPMorgan Chase tried to slay this healthcare dragon by forming their own healthcare company called Haven. Three years later it shut down. One reason cited for its failure was that the companies "underestimated the complexity and challenges of the healthcare industry." Aetna's former CEO Mark Bertolini noted in 2019 prior to the closing that Haven had "too small of a population to have any near-term impact" on healthcare. If these three companies with more than a million employees can't succeed, then how in the world can employers with significantly fewer employees do so?

The need to gain more control of healthcare costs comes with negative implications for employees, too. For example, some employers are financing DPC for all employees to control costs. This assumes everyone wants it or the same kind of DPC. I use one of those doctors, but the type of service I was looking for was very specific. I wanted someone who would use my Apple Health data to interact with me. Recently I had a video appointment with my doctor at 8 a.m., and he pulled up my health information on his screen showing my weight from an hour earlier. My smart scale blue-toothed my weight to my Apple Health app, and it was available for my doctor on the call, along with other health information. I also took my blood pressure and heart rate before the call. 

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It took me a long time to find such a doctor. When it comes to healthcare one size does not fit all. Whether it is DPC, some Rx program or type of specialty care, I may prefer to spend my money in a different way from others. Employers putting all employees into similar programs to control costs is not necessarily in the best interest of the individual.

Most employees do not want their employer to know what is going on in their personal lives. And most employers should ensure they don't improperly obtain employee health information. With employers being in the health risk business, those lines start to become very blurry. A small employer could probably deduce who is incurring what claims when looking at claims data. It is a slippery slope.  

I believe, for the most part, employers don't want to be in the health risk business. They don't mind providing funds for health insurance, but they do mind being in the health risk business. If they could get out, they would. I also think most employees and the government want employers out. It is only those who built businesses around keeping the employer in the middle who care.   

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Employers need to take direct action vs. rely on those who depend on the employer in the middle for their business. I jokingly say employers should underwrite the risk before you hire them. Employers simply should avoid hiring older, overweight smokers. Two Detroit area health systems refused to hire people who smoked because of the potential healthcare cost liability. I don't advise these extreme measures because it invites discrimination. 

There are a few things they can do. In roughly half the states moving to an individual coverage health reimbursement arrangement, or ICHRA, is a viable option because the individual health insurance markets are competitive. For those where the markets are not as competitive, employers should reach out to their local representatives or the State Insurance Department to express their desires.