Hammett Consulting Blog

 Access Based Health Insurance

As you all well know, we are experiencing a dizzyingly frenetic period in our industry. Health Insurance has been top-of-mind for many politicians, civic leaders and reporters, who have never given the subject a second thought, unless of course they or a loved one needs medical care. This eBook is our attempt to distill many of the lesser known or understood concepts floating about in our industry into a practical tool for discussion, marketing and/or simply a reference guide.

Many of you are familiar with terms like MEC, Limited Medical, MVP, Hospital Indemnity and even Skinny Plans. In this document, we attempt to define and reassign a more universal designation to consolidate and identify these various names. Our hope is that from here on out, we will call any plan with first dollar (no deductible or coinsurance) coverage Incentive Based. We can distinguish these plans with a more traditional Major Medical design as Disincentive Based (as they rely upon financial barriers to reduce or control utilization) Fully insured or self-funded, plans will fall into one of these two designations

This eBook includes details on the following subjects:

1. ·       Definitions and Examples of Best in Class Incentive Based Plans
2. ·        New Business Acquisition Strategies
3. ·        Best of Class Carriers and Plans Sponsors
4. ·        Turnover Reduction Strategies
5. ·        Common Mistakes that We All Make with Non-Traditional Plans
6. ·        Existential Threats to our Industry and Your Livelihood

Client Retention & Sales

Despite all the debate and speculation, brokers and their agencies still need to continue to grow and prosper through both acquisition and the retention. In this eBook we have attempted to gather a series of marketing strategies that specifically address the needs of an underserved yet rapidly growing market segment, the low wage hourly service employee.

Please feel free to unpack any of the sections for use as a reference tool, marketing guide or training tool for your new associates. Of course, we would love to hear from you and serve you as a valued consultant. As always, our services come with no strings attached, nor do I charge fees, go directly to employers or interfere with any carrier compensation arrangements.

Three Most Common MEC Plan Models

Private Label (Aggregated Service) Plans – Inherently more costly. Why? These plans are developed and distributed by sales and marketing organizations. Not being insurance companies, these organizations have little to no in-house administrative capabilities. These plans must import or contract out for administrative and customer services. Because these vital services are contracted, and each partner entity must build in profit margin, they will always be more costly and less effective than internal carrier services from a single source health plan.

TPA Plans – As it is with the private label plans (above) TPAs must go outside for many of the built-in customer-related services that insurance carriers already have. In addition to the cost of importing services, our experience shows that a TPA will tend to overprice administrative services when they are linked to a MEC plan. It is our theory that TPA’s discovered early that you could double or triple normal per member fees when you connect these fees to a MEC product. In order to supplement the MEC preventive-only coverage, TPAs also must either contract with insurance carriers or self-fund them. Once the MEC Plus basic services are built out and margins are accounted for, the plans are more costly than a single platform insurance company-sponsored plan.

Beware of the TPA who sells MEC Only option. Although technically compliant with the employer mandate (4980H(a) This is the surest way to force employees away from company-sponsored plans and into a state/federal exchange. Two reasons for avoiding the MEC Only option (1) Exorbitant administration fees. Upwards of 70% of the cost goes into fixed costs and profits for the TPA (2) A MEC Only option does little or nothing to curb turnover or employee loyalty since it provides only preventive services.

Single Platform Carrier Plans (preferred) – Single source carrier sponsored MEC Plus plans will always deliver a higher benefit to dollar value due to built-in economies of scale (shared services) An insurance company that focuses on this market will staff and train dedicated employees to better understand how the plan works and are better able to communicate this to the member. Better customer support and lower margins result in economies of scale and a better value proposition. Therefore, we would, in most cases, recommend this model over the others described above.

NOTE - Certain carriers will outsource paper to either a TPA or Private Label plan, in these instances, the economies of scale, that a carrier would normally enjoy have been lost. Care should be given to identifying Single Platform Carriers from those who “rent paper” to private label or TPA plans, these "rental plans" lose all the economies noted when they rent paper to a private entity. 

• A medium-sized (50 to 1000) hourly employee working 30+ hours per week?
• Trying to re-employee workers post-Covid?
• An employer with at least 50% medium to low wages hourly employees.
• Negatively affected by high turnover and competition for competent labor?
• In the following industries: Food Services, Hospitality, Agricultural, Nursing Homes, Retail or Security
• A group or single-owner franchise?

NOTE: The following questions are designed to flush out a poor strategy by the in-force broker. I promise by asking the following questions, you will pick up at least one new client out of every ten you ask.

• Do you have more than 50% turnover in their hourly workforce?
• Are there more than 50 hourly or part-time employees?
• Do you currently offer these hourly workers a MEC (Minimum Essential Coverage) or MVP (Minimum Value Plan)?
• Do you currently offer a MEC only? 
• Does your MVP plan have any enrolled employees? Do you know if your MVP plan includes reinsurance?
• Does your MEC plan return 100% of all unused claims each year?
• Has your experience with health plan administration been poor?

• Let's review the answers to your probing question.
• Let's identify weaknesses or critical problems with the in-force plan.
• Let's jointly come up with a strategy/alternative plan to replace the deficient (in-force) health plan
• If appropriate let's submit a request for proposal from a selected vendor
• Present your findings to the prospective client
• Ask for the Broker of Record

Economics: According to a 2017 U.S. Census Bureau report, 25.0 percent of Hispanics, in comparison to 14.7 percent of non-Hispanic whites, worked within service occupations. 21.9 percent of Hispanics in comparison to 42.9 percent of whites worked in managerial or professional occupations. Among full-time year-round workers in 2017, the average Hispanic/Latino median household income was $49,793 in comparison to $65,845 for non-Hispanic white households. In 2017, the unemployment rate for Hispanics was 6.0, as compared to 4.2 for non-Hispanic whites. In 2017, the U.S. Census Bureau reported that 19.4 percent of Hispanics in comparison to 9.6 percent of non-Hispanic whites were living at the poverty level.

Insurance Coverage: It is significant to note that Hispanics have the highest uninsured rates of any racial or ethnic group within the United States. In 2017, the Census Bureau reported that 49.0 percent of Hispanics had private insurance coverage, as compared to 75.4 percent for non-Hispanic whites. Among Hispanic subgroups, coverage varied as follows: 46.7 percent of Mexicans, 54.6 percent of Puerto Ricans, 55.9 percent of Cubans, 41.9 percent of Central Americans. In 2017, 38.2 percent of all Hispanics had public health insurance coverage, as compared to 33.7 percent for non-Hispanic whites. Public health insurance coverage varied among Hispanic subgroups: 38.4 percent of Mexicans, 45.1 percent of Puerto Ricans, 35.6 of Cubans, and 34.4 percent of Central Americans. Those without health insurance coverage varied among Hispanic subgroups: 19.3 percent of Mexicans, 7.9 percent of Puerto Ricans, 13.7 percent of Cubans and 27.2 percent of Central Americans. In 2017, 17.8 percent of the Hispanic population was not covered by health insurance, as compared to 5.9 percent of the non-Hispanic white population.

Partial Solution: Pan American (Hispanic Owned and Controlled) specializes in providing employer sponsored health plans that not only meet ACA compliance regulations, but are culturally sensitive, offering benefits for repatriation, in case of death and patient advocacy (direct negotiations) to assist covered families in reducing out of pocket costs for non-covered or partially covered benefits.

 Estimated cost of single-payerr (Medicare for all) 3 trillion per year. (As a point of reference, the federal government spent less than $4 trillion in 2016, and ran a deficit of $587 billion, even after the Obama tax increases "on the rich." Where would that ocean of necessary cash come from? ) No private health insurance companies "big profits" are not the problem (In 2009, Forbes ranked health insurance as the 35th most profitable industry, with an anemic 2.2 percent return on revenue. The pharmaceutical industry was in third place, with a 19.9 percent return, and the medical products and equipment industry was right behind it, with a 16.3 percent return) No, the government is not more efficient (Forty percent of U.S. healthcare spending — more than $1 trillion per year — produces no care) No, it will not provide better access (the government has only one method to control costs: medical rationing. It cuts reimbursement schedules to providers, limits payments to institutions, and denies authorization for expensive treatments) redistributing US wealth does not add to the value of our nation in any way and most certainly does not solve the "health care" problem.