A central California company that provides group medical plans for employers is alleging that health insurance companies in the state are impeding small businesses from obtaining the health plans necessary to lower costs and improve benefits. “Insurance carriers operating in California such as Blue Cross, Blue Shield, Health Net and Kaiser are restricting small employers’ access to health plans, which is preventing small employers from lowering the cost of their group medical plans,” according to Mark Reynolds, president and founder of Ben-e-lect. “Specifically, employers want to enroll their employees in high deductible health plans (HDHPs) and then self-insure the benefits underneath the HDHP for their staff.” Employers achieve this by establishing either a health reimbursement arrangement (HRA) or medical expense reimbursement plan (MERP) in order to pay for a portion of the claims that apply towards the HDHP, according to Reynolds. Making such a move allows employers to lower their annual cost by an average of $2,000 per employee, he continued. Because HRAs and MERPs reduce carrier premiums by 40 to 60 percent, health carriers are making it difficult for them to establish such plans by threatening to withhold commission from brokers who enroll clients in the plans or cancel their contracts, Reynolds claimed. Sherry Skarda, a broker with Poms and Associates in Woodland Hills, has been in the industry for more than 23 years. She elaborated on the concerns that Reynolds raised. “What’s transpired over the past few years is that the insurance carriers are limiting the number of plans that we can set up this type of arrangement with. And that is where the carriers are sort of tying their hands,” she said. “We are not able to have a (partial self-funding) plan as part of what we’re selling. We don’t receive commission on it. What we’ve been able to do by using third party administrators such as Ben-e-lect is having a high deductible medical plan for small groups , from two to 50 , what we’re able to do is have the group or employer only pay the premium for the high deductible plan.” Ben Singer, spokesman for Woodland Hills-based Anthem Blue Cross in California, disputed the claims being made against the company. “What you’re seeing and hearing from the broker community is a reaction to products that we believe were never really designed to be put together in the marketplace side by side,” he said. “The resistance that we and other plans have voiced to the marketplace is based on our feeling that these products were really not designed to be coupled how some brokers and their customers want them to be coupled. When you add the self-insure (component), it takes it out of the current products we have.” Brad Kieffer, spokesman for Health Net of California, also based in Woodland Hills, offered a similar viewpoint. He argued that the key to the company’s ability to provide such plans is the principle that higher deductibles and out-of-pocket maximums will encourage members to be more aware of their use of services. “For the plans to be effective, responsibility for payment of deductibles must remain solely with the member,” he stated. “As a result , high-deductible plans are to be made available as stand-alone plans, or in conjunction with (health savings accounts), where applicable. HSA-compatible plans and other kinds of high-deductible plans address the needs of those employers and employees seeking low-premium/high-deductible health plan options.” As a broker, Skarda believes that she needs more options to effectively help her clients save money. “What about working with the brokers about cooperating and offering us more of the one or two plans that they make available?” she asked. “The only affordable plans for the employer will have such limited benefits for the employees they’re going to turn into catastrophic plans, which would only cover catastrophic illnesses. There would be no first dollar coverage.” Singer said that, for now, Anthem Blue Cross is considering its options. “I think if the market continues to demonstrate that this is a desirable direction they want to go in by trying to couple these two different lines of products that we have as a health plan, we’ll see how we can possibly make this happen with something that works for all sides and arguably would be sustainable,” he said.
