David Hodges recently merged his own brokerage into Vantreo Insurance Brokerage, becoming vice president of employee benefits after operating independently for nearly 30 years in the North Bay. He has focused exclusively on employee benefits during that span.
Q: Now that health reform is here to stay, what should companies be planning for and what can they expect, in terms of health care costs and overall impact on their workforces?
Mr. Hodges: I don’t believe this is a settled issue. Until it is, employers will be in limbo.
Q: Much has been made of the notion that companies will be incentivized drop employer-sponsored health coverage with the health insurance exchanges coming on line. Is this still a possibility or is it hype? What might incentivize employers to keep health benefits in place, particularly small to mid-sized business?
Mr. Hodges: This is a primary question that most benefits broker lose sleep over. The over-burdensome administration of the Affordable Care Act will lead some small employers with low profit margins, and mid-sized employers with easily replaceable, non-highly skilled workers, to cancel health insurance. This represents a small minority of employers; however, the lure of lower costs of $2,000 or $3,000 per year for each employee cost compared to the over $5,000 cost for traditional plans will cause some employers to drop employer-based health care. Employers who want to retain control of what is offered and how it’s offered will retain there employer-based plans.
Q: If employers do drop their plans, will the exchanges and other elements of health care reform be enough to provide comprehensive health coverage for individuals?
Mr. Hodges: The exchange must by definition increase the cost of health insurance. If I buy a plan directly from Kaiser or Blue shield there is one fewer middle man compared to an exchange that must buy and then administer the health plan. With the no-wrong-turn provision, most anyone should be able to manage the exchange. Brokers can sell the exchanges as well, so companies that who drop coverage could establish a health insurance fair where the broker sets up a help desk to help employees navigate the exchange.
Q: The federal government recently said it would roll out two nationwide health insurance plans in every state, as a means to keep costs down and expand access. Will that plan be effective in containing costs?
Mr. Hodges: If it’s based on Medicare or Medicaid reimbursement rates, many doctors will opt out, making access the issue. if the government uses any kind of traditional fee-for-service models they cannot compete with existing models of HMO and PPO plans due to governmental administrative costs and inefficiencies.
Q: Does California’s exchange contain adequate, too much or not enough “essential health benefits” in order to be a successful augmentation — or perhaps replacement if companies drop coverage — to the current mix of employer-sponsored coverage and public health programs?
Mr. Hodges: The level of benefits are fine, but if you ask employers and employees, it’s about cost. Cost has not been adequately or accurately addressed.
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