Healthcare Reform – The Foraker Response
With the recent debate on national health care reform, we have been bombarded with accurate and less than accurate information about our health care system and what should be done to make it better. Little conflict exists over the vision of a more responsive, affordable, and sustainable system – the conflict starts when we work to articulate the tactics. The devil is always in the detail.
As most of you know, I have pursued an affordable health insurance product for nonprofits for the past 25 years – some would call what we strive for as a “private sector solution.” I have advocated a gradual, thoughtful process that allows nonprofit employers to provide adequate coverage for their employees – those people who do so much to inspire, educate, protect, build, serve and support society. In my opinion, there is no greater justice than making sure those who serve mankind can also protect themselves and their families during a catastrophic illness or injury. This is why, in spite of many obstacles, we continue to work on a solution.
Regardless of the current debate, I expect certain trends to emerge as a national plan evolves. Employers and employees will likely be asked to do more to provide insurance coverage. Today we can’t drive in most states without car insurance. In the future, not having some form of health insurance won’t be an option, either. Clearly, government will be part of a new health care system. Already we have government-managed systems for senior citizens and people who can’t afford to pay for their care – Medicare and Medicaid – although both need revisions to become more effective. And the concept of promoting wellness has universal appeal and will be a part of any solution.
Now for some rare editorial comment. Our board training speaks to the fact that governance bodies (boards) are responsible for making decisions “based on their own best judgment after reasonable inquiry.” In theory, and as stated in common law, board members are tasked to put aside personal benefit and bias to reflect on the greater good. Congress, too, is comprised of two bodies, which could be thought of as boards. As witnessed in recent town hall meetings here in Alaska and around the country, Americans are frustrated with the lack of leadership from these bodies and are calling on them to govern more effectively. Our Congressional representatives would do well to follow the rules for effective board members – put aside personal and party interest, and work for the common good. They must rise to the occasion and help restore faith in a government that “works for the people.” On that point, I will stop my editorial comments because, quite frankly, this issue is so complex that even the best-informed person will have difficulty articulating the right solution.
What I can share with pleasure are the results of work by The Foraker Group on health care. Last October we implemented a bold experiment. With the cooperation of Premera Blue Cross-Blue Shield and with tremendous support from the Rasmuson Foundation, we began promoting a health insurance initiative for Partner organizations.
In the beginning we offered two “off-the-shelf” health insurance plans with the vision that once we reached critical mass, or the right mix and number of employees, Premera would then shift those groups into a true association plan. As far as we know, no other insurance provider has ever offered such an opportunity for an association. Nor has any association built such a holistic structure to ensure success. Our approach is now being validated by the national debate. Improving health should be the first strategy. Through promoting wellness and providing free preventive care, we will, over time, control costs.
The most innovative part of this initiative requires that all participating employers promote wellness with their employees by encouraging them to complete a confidential online health risk assessment as well as by developing worksite wellness programs. The reason this feature is so important is that no health system will be affordable if we first don’t address health. Health is not just seeing a doctor, having insurance, or taking a pill. Rather, health is when we do all we can to be healthy. Research shows that health promotion efforts have an impact on the bottom line – a very positive impact. More important, people become healthier.
We now have 11 months of experience with our wellness strategy and have found that as an association we have the highest rate of participation of any group or employer in the Premera region. Because of this, Premera has granted our plan an increase to the rate incentive it offers from $10 to $30 per employee/per month. And, the Rasmuson Foundation continues to subsidize health risk management service for us for the first three years, which provides additional benefits for groups joining now.
Also on the prevention side, our plan provides free annual checkups and routine tests. In the past, I was always frustrated with my plan because all I ever needed was my annual physical – once I paid for it out of my pocket, I never needed anything else. Even though I was comforted to know that I had the safety net of coverage if I needed it, I was frustrated that my insurance did not cover the only thing I ever needed, a physical. With these new plans, I do not have to pay anything for my annual checkup and I still have the comfort of additional support, if I need it. We have done all we can to address the right issues up front, so we can reduce the need for costly and preventable expenses down the road.
The two initial plans offered were as affordable as we could find while still providing these basic building blocks of wellness and preventative care. One of the plans was a typical indemnity plan – requiring a deductible, followed by 80/20 coverage to a maximum amount, then 100% coverage. This plan also provides a prescription card with co-pay. By design, we wanted this plan to be as affordable as possible, but with a deductible that would not break the bank of most nonprofit employees. We chose a deductible of $2,500. It also offers six more office visits with co-pay in addition to the annual physical.
The second plan was a new product – a high deductible plan ($1,500) connected to a Health Savings Account (HSA). This plan works like a more traditional plan – when the deductible is met, an individual gets 80/20 coverage up to the maximum. But unlike a traditional plan, there is no prescription benefit and after the annual physical the insured pays for all office visits until the deductible is met. Yet with an HSA, the individual and the employer can deposit pre-tax dollars into the account to pay for prescription drugs, office visits, and other federally approved expenses. These accounts are like 401-K’s for retirement. The Foraker initiative requires that employers put a minimum of $750 into their employee’s HSA and, thanks to the Rasmuson Foundation, an additional $250 a year for two years will also be deposited into each employee’s HSA. This summer we added a third plan, which is even more affordable, with a $3,000 deductible and an HSA.
While we are not at the critical mass needed to become an association plan just yet, we are getting very close. Here are some of the recent highlights:
- 318 employee lives are currently enrolled (as of 08/21/09).
- 26 groups are enrolled.
- Four groups with the potential to bring on 11 additional employee lives have inquired about the plan (as of 08/21/09).
- In January 2009, approximately 130 employees were enrolled in the benefit plan. The plan more than doubled that number in 7 months.
- In spring 2009, eight briefing sessions were held to provide updates to Partners and brokers.
- Two of our largest groups joined during June open enrollment – one group with over 70 employees and another with over 30.
- Almost half our members have completed the online health assessment. This is the highest rate of all Premera groups in Alaska, Washington and Oregon.
- To date, two wellness workshops have been held in Anchorage, the next wellness workshop will be held in Juneau in September. Recently, interest surfaced in Fairbanks for a wellness workshop.
- The requirement of funding dependent coverage has been lifted.
- Waiting periods to enter the plan have been waived, although participants must still be Foraker Partners.
- A group of preferred brokers has been identified. These brokers are familiar with the plan and have sold and/or consistently promoted it. Partners will be referred to preferred brokers.
As you can see, we have much to be excited about. We will soon reach the number of employee lives needed to switch into an association plan. Once we reach that goal, the entrance into our program will change. The incentive of additional funds into an employee’s HSA may be discontinued. We will also increase the waiting period for new Foraker Partners to prevent the possibility of high-risk groups joining and negatively affecting costs. But on a more positive note, we will be able to become more flexible with plan design. For instance, today we know of many nonprofits with only one employee that are looking for health insurance. We cannot offer them access to our plan because of state rules. However, once we are an association, we can provide coverage. Most important, through the association we can begin to stabilize rates and help nonprofits budget for this expense with confidence.
As the national debate continues, we are working for you and the sector on a long-term solution. The national debate will not reduce the need for us as employers to address health care needs of our employees. We encourage those organizations that are currently sitting on the fence to join us. Long-term benefits will come to the few brave leadership organizations that help to make this dream a reality.
Since we envisioned this initiative, Foraker and Rasmuson have worked with two highly respected national consultants – Stephen Isaacs and Paul Jellinek – to guide us. We have re-engaged them to review what we have done, advise us on what else we should do and to develop “white papers” on issues affecting our efforts. Following this article we have printed one of those papers. It is their observation of the current national debate and the effect it could have on our initiative. We will print additional white papers from Isaacs and Jellinek over the next months.
If you have questions about The Foraker Benefit Plan, please contact Rebecca Savidis by phone at 907-743-1200, or by email at email@example.com.