When navigating the complex landscape of
Many are stuck in the quagmire of selling only products that are available in marketplaces. But recycling the same solutions — notably those provided by BUCA plans (Blue Cross, UnitedHealthcare, Cigna and Aetna) — will not do much to contain costs or
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In this context, ERISA (Employee Retirement Income Security Act) plans emerge as a promising alternative for employers to explore with their broker partners. These plans, which function similar to HMOs and provide protection for plan participants, can be leveraged as a complimentary product to fully insured or administrative-services-only (ASO) agreements with the BUCAs.
ERISA plans offer a unique option to bypass BUCA coverage in the creation of a health insurance product via direct contracts between employers and providers. When a BUCA serves as the ASO contracting entity for a self-funded employer, it charges a management fee to access their provider networks and management protocols for employee care. Under this scenario, BUCAs then contract out services to a wide array of providers in the employer's communities who are trusted with delivering efficient care.
This system, which competes with independent third-party administrators (TPA) and other autonomous industry players, offers choice plus a heavily fractured passive delivery mechanism with minimal patient oversight and coordination. There also are inherent conflicts wherein steering members to a BUCA-owned TPA, provider network or other affiliated partner may not be in an employer's best interest.
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ERISA plans flip this script, creating a unique opportunity to improve employee health status by eliminating these concerns. They will contract directly with a health system or handful of top providers in a local community. By restricting choice on providers in the network, material rate reductions to traditional BUCA rates can be achieved. Additionally, smaller networks that keep care within this narrow network of providers can obtain much better coordination of patient care and increase efficiency. Broker commissions can be comparable to BUCA rates in this setup. The net effect can be an improved health status of employees and reduction in sick days, which saves the employer money.
ERISA plans, however, come with some drawbacks. They are local and require resources to build. Another is the geographic limitations of these networks with employees scattered outside of their employer's markets in a society that values maximizing individual choice of providers. These are all fair arguments until the unit costs of care and outcomes are overlaid.
The challenging piece is who will pay to build and maintain these plans? This is where the broker community can become an active change agent in the market rather than a passive BUCA sales agent. If brokers create the product in targeted strategic markets, they can position themselves as both sales and solution brokers who mine two separate and distinct revenue streams.
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ERISA plans will not be a fit for every employer. BUCA is well positioned to offer care in all the locations where employees live. But these two products can coexist as part of a broker sale. Success can occur by offering two tiers of benefits to employees. Namely: ERISA plans for cost-conscious employees who are willing to trade price for provider choice and BUCA for out-of-area and choice-conscious employees.
The savings will likely be significant to the employer, which can be used to steer covered lives to the ERISA plan. For those on BUCA products, they will pay a significant premium for their benefits. If the delta is material to the employees, they will likely consider the lower cost-plan, thus saving the employer more money.
A strong argument for brokers to create an ERISA plan in strategic markets is the ability to replicate the sale with additional employers in the market. Brokers can choose to make the ERISA plan available strictly to their brokers or open it up to the entire market. A broker-specific plan can bid on employer groups with a standout delta to the BUCA-only brokers. What is that worth?
The health insurance industry is at a significant crossroads. Traditional solutions from BUCA carriers are no longer sufficient to meet the evolving needs of employers and employees. ERISA plans offer a viable path forward, providing the flexibility, cost savings and innovation required to reimagine healthcare. By embracing these plans, health insurance brokers can lead the charge in delivering more efficient healthcare solutions for their clients.
