In a bid to increase its 5 percent share in the local health insurance market,
United HealthCare is launching a program that gives small business owners more
plan options to offer their employees.
United's Multi-Choice allows employers with 50 or fewer workers to select
any number of plans among 30 separate options, from high-deductible to
full-coverage plans.
The plans use a "defined contribution," which means that businesses pay
employees a set dollar amount that, combined with some contribution from the
employee, workers use to pay for the plan they want. If they want a plan with
broader coverage that costs more, the employees pay the difference; if they
choose a less expensive plan, the employees have lower out-of-pocket costs.
Traditionally, options for small businesses have been limited because of
the administrative costs and hassles dealing with multiple plans and, from the
insurer's perspective, a reluctance to offer coverage because of the greater
exposure insuring a smaller risk pool.
With a plan such as Multi-Choice, businesses can offer employees more
options without adding to the administrative burden. A defined contribution
also gives business owners more control over managing health care costs.
"I think there is a segment of the market that this is always going to
appeal to, particularly for employers who are looking for an easy way to offer
health insurance without having to deal with the nuts and bolts of health
insurance," said insurance broker John Seltzer of J. Seltzer Associates, in
Mt. Lebanon.
Noting the similarity to the marketplace model of health insurance
exchanges, he added, "I really believe that it is" the future of
employer-provided health insurance plans.
Indeed, Pittsburgh-based insurer Highmark Inc. has been piloting its own
"private exchange" program for several months in which employers choose from a
number of different health, dental and vision plans to offer employees at a
fixed price for the employer.
That program, called myBenefits, "is now available to brokers and small
business customers throughout Highmark's Pennsylvania service area,"
spokeswoman Kristin Ash said.
And, this week, the Wall Street Journal reported that major employers
Sears Holdings Corp. and Darden Restaurants Inc., which owns Olive Garden and
Red Lobster restaurants, are going the defined-contribution route, giving
their employees a set amount of money and then having them choose a health
plan among choices from an online marketplace.
The key to defined-contribution plans succeeding, however, may rest with
whether employees embrace the concept.
Just as the switch from defined-benefit pensions to defined-contribution
put employees' retirement at risk, defined-contribution health insurance would
seem to move at least some of the risk of high health care costs from employer
to employee.
"It clearly is designed to make things easier for small businesses. The
question is, are you actually getting a better deal for employees in terms of
premiums and benefit diversity?" said Harold Miller, president of Future
Strategies LLC management and policy consulting firm, Downtown. "I think
people are going to be more reluctant if this does limit their benefit."
Mr. Seltzer wonders, too, how employees will react to being handed a menu
list of plans and left to decide which choice is right for them, as senior
citizens do now with Medicare Part D plans. "I think there are going to be
fewer people prepared to make those decisions than we think."
It's bound to be an adjustment for workers whose employers historically
have offered one or two plans and then covered all or most of the cost, with
employees contributing a portion of the monthly cost.
"I think most employees like the idea that the employer is making the
decision," Mr. Seltzer said. "There is a certain comfort level in knowing that
the employer has vetted the product."
United officials met with about 100 local brokers at a Cranberry hotel
Friday to explain its program, which launches locally Monday. The insurer says
it has already sparked interest.
United's Multi-Choice plan may be new to the Pittsburgh market, but the
insurer based in Minnetonka, Minn., already is offering it in 23 other states,
with plans to introduce it in Rhode Island and Georgia in the next six months
or so.
"Multi-Choice, and the whole concept of defined contribution, is really
taking off," said Dennis Spingola, United's vice president for broker
relations.
Distributed by MCT Information Services
