Empowering workers with greater freedom of choice is proving to be good for workers and employers – but how does it affect the insurance industry?
In this current climate of alternate facts, real data shows that employers who populate their ‘group plans’ in part with direct-to-consumer health policies can actually improve the health insurance industry’s overall performance.
Hixme’s model of empowering workers with better fitting, more affordable coverage can result in a net gain in healthy enrollment for the carriers – and can prove beneficial to the entire market. This, according to Axene Health Partners, whose study “Health Market Impact of Employer Migration to the Individual Market” contracted by Hixme found: “Enrollment of large segments of demographically mixed individuals will enhance balance to the existing risk pool and facilitate the enrollment of more young adults into the market.” (Axene, page 18)
Healthier Enrollment Growth: Enrollment growth from Hixme occurs for two reasons. First, workers previously opting out of the more limited traditional plan choose to opt-in to this kind of model that they can tailor specifically to their needs. Second, dependents may opt-in for the first time due to more attractive, flexible coverages that are unique to a specific family member not the family as a whole.
Fit-By-Family-Member: This “fit-by-family-member” is a natural by-product of the increased value for employers through private exchange models like Hixme’s, where each family member can have a different plan at more relevant prices, creating some “coverage shoppers” and other “price shoppers.”
Price Shoppers: Typically, price shoppers (whether a worker or a family member) are healthier, creating improvements in the insurer direct-to-consumer market pools. Those improved pools result in more competitive pricing and further growth overall, creating an improved risk/growth cycle.
Risk/Growth Cycle: The insurance industry benefits directly since this improving risk/growth cycle accrues 100% to insurers, where previously in the traditional group model, risks are shared with employers and stop loss carriers.
Health care is locally delivered – why not use a local insurer?
In the Hixme model, with direct-to-consumer coverage, workers select “local” insurers. When an organization is headquartered in one state, and workers are located in other states, those insurers who have invested in brand and network values in local markets can leverage that investment more effectively into enrollment growth with a consumer-centric offering like Hixme’s Workplace Market as the better local choice. For example, Company A is located in Chicago and has used an Illinois-based carrier for its traditional benefits nationwide. In that model, regardless of location, workers might not be allowed to choose “their” local plan market leader for access to care, being tied to the Illinois plan affiliates only. With Hixme enrollments, those same workers, scattered throughout the country, are able to select a local health insurance carrier’s plan in their own zip code. The advantage for the local carrier is a net gain in enrollment. It follows that plans investing in specific neighborhoods have stronger values and presence resulting in increased leverage with local providers. It’s a win-win situation for all involved.
“With Hixme enrollments … workers, scattered throughout the country, are able to select a local health insurance carrier’s plan in their own zip code.”
The evidence is clear, as demonstrated by the May 8, 2017 Axene Health Partners, LLC report: “Health Market Impact of Employer Migration to the Individual Market.”
Link to these references:
- Carriers should take note of the Hixme model as, by virtue of being employed, an actively-at-work population indicates a healthier membership. Also, a healthy worker is more likely to enroll when coverage is sponsored and partially subsidized by their employer. Employers’ populating their group plans with direct-to-consumer plans will help minimize claim variation, add to balance of the risk pool, and lower average costs in the market. (Axene, page 4)
- The transition of workers from group coverage to Hixme-like coverage results in a larger, younger, more sustainable individual market population. Furthermore, this population improvement to a broader age/income spectrum attracts insurers that have been discouraged by the past and current volatility. (Axene, page 5)
- Enrollment of large segments of demographically balanced workers will enhance the existing risk pools and facilitate the enrollment of more young adults into the market. (Axene, page 18)
- Employer participation in the direct-to-consumer market will likely be well received by insurers who have a stronger comfort level with coverage facilitated through an employer arrangement. (Axene, page 23).