Health Insurance Innovations Lower Your Rates

Health insurance innovations in the last 20 years have been an important factor in driving down medical costs for both consumers and insurers. Recent changes in legislation (state and federal)  have reduced costs and increased efficiency for millions of Americans. And this trend should continue as we discover and implement new methods and techniques over the next 20 years. Small business, single and family plans will be impacted.

Streamlined billing is one of the biggest advances that has lowered expenses. While the claims process is not entirely paperless yet, it is getting closer to achieving a near-paperless environment. There are many software companies that have committed much time, money and manpower into developing products that many hospitals and physicians now use. Coding of claims is now the rule, rather than the exception which has helped modernize the process.

Impact Of Federal Government

The federal government is also encouraging small and large businesses in the healthcare field to update and modernize their medical records documentation. Hundreds of millions of dollars in aid has become available in grants that provide large incentives to implement changes that ultimately will protect the consumer. Of course, this does not include financial subsidies in the form of instant tax credits that have saved many Americans millions of dollars in premiums.

Privacy is always considered, as  keeping HIPAA compliance rules and regulations must be understood and implemented. Basic patient data, including charts, medical records, treatment history and scheduled followups must be accurate and secure. fortunately, this is occurring, with access to personal data  being protected, especially dependent medical coverage information.

The Patent Protection And Affordable Care Act (ACA) not only changed the way medical coverage was purchased and provided, but many privacy safeguards were also implemented. Transparency (patient and physician) has increased along with the accuracy of information that is provided. Many innovative ideas have been introduced that help report, collect, and analyze data.

Change In Number Of Health Insurers

Changes In Medical Insurance

Innovations In Health Insurance Can Reduce Your Rate

Some of the changes we are seeing in the industry is the reduction in the number of health insurers. Currently, the largest carriers are UnitedHealthGroup, Wellpoint, Aetna, Humana, Cigna and Coventry. They seem well-poised to build their market share as we move into the era of “The Affordable Care Act.”

However, With Aetna’s merger with Humana, and Wellpoint’s (Anthem) merger with Cigna, suddenly, the number of major carriers has significantly dropped. And let’s not forget that Coventry is a fully-owned subsidiary of Aetna. And in related moves, many of the country’s co-ops are losing substantial amounts of money and may not continue to offer policies.

When most policies  began to be underwritten as “guaranteed issue”  in 2014, administrative and underwriting expenses started to reduce as operations became more streamlined. The big companies hoped to be able to add enough policyholders to their book of business to sustain long-term profitable growth.

Perhaps their profits wouldn’t be as large, but possibly steady and somewhat more predictable. It’s too early to determine if that scenario will unfold. Carrier mergers (previously mentioned) complicate the industry. But by 2017 or 2018,  we should have a much clearer financial picture.

Smaller Insurers

Smaller regional companies face growing major obstacles. In the past, many local insurance companies thrived. They were able to negotiate steep discounts with physicians and hospitals. Since they are located within the community, familiarity plays a big role and both provider and insurer benefit. And of course, the customer is happy since they pay lower rates.

However, as  “no underwriting” medical plans began in 2014, the regional carrier started to face a major uphill battle. They didn’t have the volume of business being written like the “big boys.” Their reserves were at risk and more susceptible to multiple large claims. For instance, in Central Pennsylvania, Geisinger, a very-respected carrier, must compete with Capital Blue Cross, Highmark and Aetna. These three companies are much bigger and financially stronger, by being able to withstand large losses much easier.

Purchasing Qualified Healthcare Is The Law

Part of the ACA legislation mandates that everyone must be covered (unless you qualify for an exemption). But there will always be the risk of consumers simply purchasing their policy only when they need it, although Open Enrollment deadlines may sway their decision. However, a significant problem will occur for any person that did not purchase mandated coverage, and suddenly needs expensive medical treatment. If the procedure/surgery can’t wait until January 1 of the following year, it won’t be covered.

And yes, there is a tax imposed if you don’t comply with the law. But the law,  is somewhat flimsy with little backbone. For families, a $2,085 or 2.5% of income (whichever is higher) annual tax may not be a strong deterrence from avoiding paying a $1,500 premium.  And perhaps even a $750 premium. In fairness, we expect enforcement to drastically improve by 2017.

Carrier Participation In Marketplaces

Exchange Health Insurance Companies

You May Be Eligible For A Marketplace Subsidy, Depending On Your Household Income

Although we doubt that the Blue Cross and/or Blue Shield companies will exit the marketplace (or UnitedHealthcare and Aetna), once the seven largest carriers are excluded, you may not have the safety and security that may be needed to survive. NOTE: Although many large carriers are public companies, and issue common and preferred stock, “Health Insurance Innovations,” (HIIQ stock), although public, does not offer Marketplace plans.

However, what we continue to observe,  is that these larger carriers are not participating in every state Exchange Marketplace. They are very choosy and selective about which areas of the country they write business. So it is possible that some states may continue to only have a few insurers writing business for a large number of  residents. Then, if the few remaining companies leave, the government may have to step in and somehow coerce companies to re-enter the marketplace.


FYI – The states with the most participating companies in their Marketplace are:

16 – New York

16 – Ohio

15 – Wisconsin

14 – Texas

13 – Michigan

11 – Arizona

The states with the least participating companies in their Marketplace are:

1 – West Virginia

2 – Wyoming

2 – Hawaii

2 – Vermont

2 – Alaska

2 – Delaware

The Future Of US Healthcare

So let’s look into the future…perhaps 10 years from now. What innovations will we likely see?  Imagine this idea: At the time you apply for coverage, you are given an option to furnish a strand of your hair. If you consent, you could qualify for a 25% reduction in your rate, since the medical information gathered by the insurer will help predict your future claim pattern.

Or try this one? Like most persons with coverage, you probably carry your policy ID card with you that contains your policy number, deductible, copays, the Network you use and other basic details about your policy. Can you imagine a “chip” that you either carry or is somehow imbedded under your skin that takes the place of the ID card. It may not be as far fetched as you think.

Innovation in the health care field is here to stay. And most of the changes will have a positive impact on our daily routine. It will be very interesting to see  how quickly we see noticeable differences in those routines and how much money it saves us.