Dan Coyle is a two-decade veteran of the employee health benefits industry who advises corporate clients on all aspects of their health and welfare plans. Serving primarily large companies with more than 1,000 employees, he specializes in the employer implications of the Affordable Care Act and is also a thought leader in the areas of consumer-driven strategies, private exchanges, ERISA compliance and wellness plans. Here, we talk with him about the effects the ACA has had on big employers, current trends in cost sharing, and the state of healthcare transparency today.There has been a lot of discussion about the ACA and how it would change health plans. What are you seeing from the employer perspective?
My largest client has about 120,000 employees and my smallest has about 3,500. I think the experience for small employers, say fewer than 1,000 employees, is very different from the experience for larger employers simply because the latter already have more complete benefit plans that cover a full suite of services. From my perspective, the large employers’ main concern today is complying with the reporting and fees required by the ACA. In addition, they now have to make sure that they’re covering all full-time employees. The impact of that has actually been pretty significant because most of them have a lot of part-time employees or contingent employees, like nurses, that have different shifts, and their hours vary quite a bit. We’re seeing a big record-keeping effort to make sure these employees are tracking their time because, as you know, there are very big penalties for classifying an employee as part-time when they are really full-time.
With the ACA going into effect, millions have been added to the insurance rolls and yet there seems to be this big divide when it comes to the out-of-pocket contributions of people at large employers vs. smaller employers or those who are on the individual market. Is that still the case or are you starting to see some cost sharing happening in the larger markets?
Yes, we’ve seen cost shifting in two forms: contributions are going up but cost sharing is also going up. If you look at deductibles over the last 10 to 15 years, you can really see an upward trend, part of which has been fueled by the advent of health savings accounts and catastrophic-type health plans. But I think the ACA has just exacerbated something that was already there. My clients have tended to keep their plan designs the same in terms of deductibles, but then they’ve had to cover the fees, as well – the transitional re-insurance program fee, the health insurer’s fee, the PCORI (Patient Centered Outcomes Research Institute) fee. Those have added up over the past few years and have led to higher employee contributions over time.
However, employers are trying to find other options for managing costs aside from just shifting it to their employees. We’re seeing that in wellness plans, other cost-management techniques, and the addition of consumer-driven cost-saving options, such as HRAs and HSAs. I think in just the last few years, employers have been recognizing that they may have gone to the cost-shift well too often and that they have to start managing the overall gross cost of the plan.
One thing that we have to be excited about is cost transparency – allowing employees to see the cost of the procedures before they go to the doctor, enabling them to shop and be better consumers.
Let’s talk a little bit about healthcare transparency because that’s something that been again talked about for a long time, but no one seems to have a great solution for getting the right information to consumers. Even a consumer who is very active about asking for information can still end up with a bill that is two or three times what they were expecting. How do you help address that?
We are not addressing it directly. We’re relying on the marketplace to address that for us. From a consulting perspective, we are monitoring the vendors that are developing the technology to provide accurate information to consumers. When we started evaluating these transparency vendors, we were initially skeptical because their data was mostly based on surveys and not actual claims. But in the past few years, the transparency effort has improved such that they have better data on which to base their procedure cost estimates. Our role has been to objectively evaluate the source of their data and recommend or not recommend a given vendor based on the data’s credibility.
But at the same time, you’re right – you can look for cost information online and it will still be couched with phrasing that says, “This is just an estimate, your actual cost may vary.” What I’d really like to see is transparency at the provider level, not at the plan level. It’s great if you can go to an insurance carrier’s website and find out how much your knee surgery is going to be, but unless you actually get something from the provider that says your knee surgery is going to be $7,500, you don’t have full transparency yet.
As a healthcare consumer, I’ve been frustrated many times. I personally have a high deductible family plan where I pay the first $7,500. When I go to the doctor I ask, “ How much is this going to cost?” They say, “Don’t worry about it. Your insurance will cover it.” Then I tell them, “No, I’m actually paying every dime of this. That’s why I want to know.” I think that, more than anything, is impacting our healthcare system.
A lot of people don’t realize that you can ask that question. They also don’t realize they should be able to expect an answer because we are paying a lot of our bills these days under high-deductible plans.
I’m excited about the idea of bringing healthcare into the era of consumerism. I think that will ultimately bring us to a place where healthcare becomes a customer experience – a positive healthcare experience. I look forward to the time when people enjoy the experience they have not only with their provider, but also with their payor. I think that’s a long way off, but we’re taking steps.