How Community Health Models Put Employers In Control
If you want to provide health insurance for your employees, you need to work with an insurance carrier, or a broker who is appointed through an insurance carrier, right?
Wrong! There’s actually an alternative. A community health plan connects employers and their teams with hospitals and providers to control costs and remove barriers to care.
An End to the Annual Headache
The McKinsey 2024 Employer Health Benefits survey found that roughly two in three employers want to switch health insurance carriers sometime during the next four years.
Many employers are dissatisfied with their current coverage. Every year, they face price hikes and plan changes that push employer budgets to the breaking point and negatively impact employee engagement. The annual open enrollment becomes a stressful period, when employers and employees are forced to select the plan that sucks the least.
Many employers are looking for alternatives. Some simply look for another carrier, even though all carriers use the same basic health insurance model, in which the carrier acts as a middleman between employers and providers, often with strict networks and pre-authorization requirements. Switching carriers may provide some modest advantages, but it’s unlikely to be revolutionary.
Other employers are interested in taking more drastic steps. For example, according to AP News, some employers are adopting Individual Coverage Health Reimbursement Arrangements (ICHRAs) to give workers cash so they can buy a health plan on their own. While this may seem easier for the employer, who no longer has to compare plans, it’s really just passing the buck to workers, who still have to buy a terrible plan, usually on the marketplace, using the traditional carrier model.
A community health plan built with direct contracts is completely different. This solution bypasses the carrier model entirely, disrupting the status quo to provide meaningful improvement.
How Does Direct Contracting Work?
In the community health plan model, employers contract directly with hospitals and providers in their communities. The carrier is removed from the equation, and the employer becomes the payer. This arrangement provides meaningful advantages for all the players involved:
- Employers experience substantial savings. The average first year premium savings for employers is 24%, and the average annual increase to plans over three years is less than 1.9%, creating a much more sustainable and predictable healthcare model.
- Healthcare providers are freed from carrier red tape. According to the American Hospital Association (AHA), 80% of physicians say health insurance practices affect their ability to practice medicine. With direct contracting, physicians can engage with patients without worrying about carrier interference. They can also receive direct feedback from the purchasers – the employers – in order to form partnerships that deliver results.
- Employees save money and enjoy higher quality benefits. Employees contribute less out of their paychecks and enjoy very low, or in some cases, no deductibles, with low out-of-pocket costs. The AHA says 62% of patients have experienced delayed medical care due to their insurance provider in the last two years. With a direct contracting arrangement, this is no longer a problem.
A Long-Term Solution
Health insurance costs keep rising, but premiums and out-of-pocket costs can only go so high before care becomes unaffordable. Every year, employers and their workers go through the same old song and dance with no real relief. It’s time to change this.
The problems in the current healthcare system require more than a quick Band-Aid solution. Community health plans that use direct contracting with providers and health systems offer a complete break from the status quo.
Are you fed up with the carrier model of healthcare? Watch this video from my colleague, Garrett Weldon to learn more.
