Expect Higher Health Insurance Premiums, Consider Alternative Funding Approaches, CUNA HR/TD Council Attendees Told
ANAHEIM, CA – Their presentation was titled, “Employee Benefits Evolution: The Future is Clear,” but two presenters speaking Monday, at the CUNA Human Resources and Training and Development Council Conference quipped, “clear as mud” might be a better description of how to predict the future state of employee benefits in the U.S.
Mike Evert, employee benefits product manager with CUNA Mutual Group, and David Martin, managing principal, credit union services with Digital Benefit Advisors, concurred there is nothing clear about the future of employee benefits and health care coverage, in particular. CUNA Mutual Group and DBA announced in February they were working together to provide compliance resources, expertise to help credit unions navigate the complexities of the Affordable Care Act, and deliver wellness services and enhanced employee education.
“A look back at history indicates a cyclical trend to employee benefits,” Evert said. Prior to 1920, most people didn’t have health insurance coverage. Today, 50 million Americans have no health insurance, according to the Kaiser Family Foundation Health Benefits 2012 Annual Survey.
Early forms of health insurance such as the Baylor Hospital Health System and Kaiser Permanente served as models for future health care plans. “We seem to have come full circle from where we were prior to World War II. We are beginning to see hospitals in the insurance business in the form of Accountable Care Organizations (ACAs),” Evert said.
Per capita health care spending in 2010 was $8,402 per person, which translates into $2.6 trillion or 17.9 percent of the nation’s total economic activity, or GDP, according to the Center for Medicare and Medicaid Services. In 1960, that amount was just $147 per person, and 5.2 percent of GDP.
“It’s clear ACAs will have a large influence on the future delivery of group benefits, and health insurance premiums are going to increase significantly,” Martin said. “The availability and cost of health care coverage will play a significant role in employees’ decisions on where they choose to work.
“How health care premiums get paid is evolving,” Martin said. One trend is a shift toward a defined contribution approach of offering medical insurance. This transformation will be similar in many respects to the previous shift from defined benefits to defined contribution retirement plans. Likewise, how healthcare coverage is purchased will transform dramatically over the coming years. “Fewer of us will have access through our employers, causing us to seek coverage via a public or private exchange. Employers who continue to offer coverage will participate in or build an exchange themselves,” Martin said.
Consumer-driven health care plans, or CDHPs are also growing significantly more popular, Martin added. A CDHP is a health insurance plan with lower premiums and features higher deductibles and coinsurance than traditional health plans. The plans incorporate tax-advantaged tools that benefit the consumer and leverage increased personal accountability when purchasing medical services.
“However, a CDHP can’t solve the problem alone. Greater emphasis on medical cost transparency is imperative. We can’t ask for personal accountability when healthcare providers aren’t willing to share their fees. To sum it up, regardless of what efforts are taken, it will get ugly before it gets better,” Martin said.
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CUNA Mutual Group insurance, retirement and investment products provide financial security and protection to credit unions and their members worldwide. With more than 75 years of true market commitment, CUNA Mutual Group’s vision is unwavering: To be a trusted business partner who delivers service excellence through customer-focused products and market-driven insight. More information on the company is available on the company’s website at www.cunamutual.com.
CUNA Mutual Group is the marketing name for CUNA Mutual Holding Company, a mutual insurance holding company, its subsidiaries and affiliates. Life, accident, health and annuity insurance products are issued by CMFG Life Insurance Company. Property and casualty insurance products are issued by CUMIS Insurance Society, Inc. Each insurer is solely responsible for the financial obligations under the policies and contracts it issues. Corporate headquarters are located in Madison, Wisconsin.