by Mike Wojcik
The Horton Group is an IMA B2B Partner
In this new era of Human Capital Management, health plans and other employee benefits have once again risen in status for attraction and retention of quality employees. Especially during our country’s low unemployment and the ‘War for Talent’ continues.
Impacting this need, employer Health Plans are being challenged by a Healthcare system that remains in flux due to new administrative policies, regulation, technology and trends reshaping the market. In addition, large scale mergers and many new disrupters are entering the market and impacting cost. We are following these developments to help our clients seek meaningful opportunities.
Amazon, Berkshire Hathaway and JP Morgan Chase recently named their healthcare CEO, tasked with developing an independent health plan for their employer collective of over one million employees. It is not yet clear if a plan will actually be developed, but their efforts are expected to be welcomed to disrupt the traditional healthcare system to cut cost.
Association Health Plans are also gaining interest through the revised definition provided by the Department of Labor. They are limited to self-employed and small employers under 50 lives.
Many market disrupters are entering different facets of healthcare including Amazon, entering mail-order pharmacy with the recent acquisition of online pharmacy PillPack. Apple is also entering healthcare through telehealth and electronic health records while many other technology companies are testing the waters. Apple and Amazon are also both testing onsite clinics for their employees.
The Affordable Care Act (ACA) remains in discussion, especially with upcoming elections and is again being held as a pawn in the game of politics. Recent changes included postponing the Cadillac Tax until 2022 and postponing the 2019 HIT tax for fully insured plans. Untouched in the process, employees are able to still use pre-tax dollars to pay their contribution toward employer sponsored health plans through cafeteria plans. With all the proposed bi-partisan bills in Washington, we expect to see several enhancements to HSAs within the next year.
As of now, the core challenge remains high Medical and Pharmacy trends averaging 6% and 8%, respectively. Pharmacy continues to be challenged with Specialty drugs, costing on average of $5,000 per script per month. The Administration’s new pharmacy proposal carves a path for savings in the Medicare and Medicaid markets. We expect commercial markets to benefit by added transparency, faster to market biosimilar drugs and generics, control of rebates, select imports creating more competition and cost sharing of R&D with other countries.
Market innovations and disrupters are all pointing to more prevention, early detection and consumer engagement. The next change in the process is for Physicians and Hospitals to shift from “Pay for Volume” to “Pay for Value”. Within the next year, we will see multi-tiered networks designed to incent members to use these innovative, lower cost, but high quality providers.
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