Obamacare uncertainty will drive more firms to use medical group captives
Against a backdrop of rising medical costs and uncertainty surrounding the future of US healthcare, more proactive business owners are looking at more competitively priced solutions such as medical group captives.
This is according to Karl Huish, executive vice president of Artex North America, speaking ahead of the Vermont Captive Insurance Association’s annual conference, which is taking place in Burlington, Vermont, this week.
“We pay about twice the amount per capita in the US for medical care compared with other peer-group countries, such as those in Western Europe and Australia. Yet our outcomes on average are about the same. Those numbers don’t work,” said Huish.
“We are paying Bentley prices for Prius medical care. There’s nothing wrong with a Prius, but we should pay the Prius price! Because of intentional price opacity by insurers and hospitals which effectively minimises competition, only proactive employers will stem the ever-escalating costs.”
The Republican-controlled senate has faced difficulty in passing a bill to replace the Affordable Care Act (ACA), also known as Obamacare.
Huish continued: “If you polled me on November 9 last year, I would have thought the ACA would be repealed. Now I’m not so sure. And most businesses aren’t sure. We have uncertainty. Business dislikes uncertainty, as it leads to indecision and inaction.”
US President Donald Trump had pledged to ‘repeal and replace’ Obamacare, and believes the 2010 healthcare law has brought the American people rising premiums, unaffordable deductibles, fewer insurance choices and higher taxes.
“With the Affordable Care Act, many businesses have assumed it would be repealed and replaced, but at this point, no one really knows what will happen,” said Huish. “A majority in the US now believe that some level of health care or health insurance is a basic ‘right’ or entitlement—that is the lasting impact of the ACA, and reversing entitlements is nearly impossible.”
Depending on if and when the uncertainty gets resolved – and depending on the legal structure at the time – Huish suggests more businesses will consider joining a group medical captive.
He explained using a group captive allows businesses to replicate the economies of scale enjoyed by much larger employers. Another advantage of setting up a captive, he said, is that the pricing is specific to a company’s needs, rather than based on the overall experience of the commercially placed market.
“These companies are taking control of costs instead of letting Washington, DC dictate their costs,” he added.
“The key driver of costs is medical claims. And medical claims are driven by the unhealthiest 10 percent of a population. So to control costs you need to reach those 10 percent, help them engage with preventative care, make better lifestyle choices, take their medications, and when medical care is needed, find competitively-priced solutions.”
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