Long before griping about the economy was the trendy thing around the nation's water coolers, healthcare was the the hot item on everyone's lips.
Well, it might not be perfect just yet, but it's still a viable topic of conversation, particularly if you're tasked with assuring the healthcare package for your company will give people their money's worth and not be confusing as all get out.
That's why I phoned up Brandon Cruz, the founder, president and CTO of GoHealth up. It's a Loop-based company that makes getting health insurance quotes and plans far more painless than it is right now. We touched on what's involved with rethinking plans, where insurance is headed in the future and why rates keep on changing.
So, what's the first thing that comes to mind when it comes to advising HR reps on rethinking benefits packages for employees?
Brandon Cruz: You know, there can be so many different options and it can be so complex. Let's start with a company like mine. That's an easy one.
I should hope so for you!
Brandon Cruz: [Laughs.] Everybody's sitting here, these people in charge of benefits of these companies, including the company owners are saying, "What are we going to do? What does healthcare reform mean to me?" What they know is that their health insurance costs are rising by an average about 16 percent a year, year after year after year. And they're saying is, "I gotta find a way to control that."
So what you've been seeing the last couple of years is a bunch of employers raising deductibles, scaling back benefits, trying to pass some of the cost onto the employee. It's a tough thing to do, right? Because it's gotten to the point where -- it used to be, "Oh, I'm paying $25 a month for my health insurance, who cares," as an employee. Well now it's going up and up and up and you've got employees paying $100 a month and they're starting to feel. Then they start to worry about what that means. What a lot of companies are doing also is they're dropping family benefits. They'll saying, "Okay, I'll cover you as an employee, but if your family members want to join this group plan they're going to have to pay the full fare themselves." The problem with that is group benefits are typically more expensive than individual benefits because you can underwrite the individually purchased health insurance.
What you end up doing is you have an employer that's got group benefits and all of the employees are on those group benefits but they've dropped the family payments. Let's say my wife wants to join. She's going to pay -- I'm just going to make up a number -- $400 to join my group benefit but if she went and bought insurance on her own in the individual market she might pay $200. So what happens is the healthy families go and buy their own insurance, and the unhealthy families end up being on the group insurance which increases the rise of the price of insurance because now you've got unhealthier groups. So, that's kind of what's going on right now. [Laughs.]
Where do we go from here?
Brandon Cruz: After the Affordable Care Act of 2010, everybody's saying, "Well, what am I going to do right now? There's some new options coming out." The big thing with that is people on the individual market are going to be able to get their own insurance. They're not going to have to be on a group plan if they have a pre-existing condition. So that's a good thing.
Today what we do is called "defined benefit." I'm giving somebody a defined benefit. Here's your health insurance plan. "Defined contribution" means exactly what it sounds like. I'm giving you $300, you can go out and buy whatever you want. And now, because there's guaranteed issue thanks to health reform, you have no issues, I'm not going to have employees of mine that are unable to obtain health insurance. That serves two purposes: 1) It controls my cost. I know that my cost is going to be $300 per month per employee here on out, forever, which is attractive to the employer. 2) It gives the employees a lot more flexibility in what they want to buy. If they want to buy a $5,000 deductible that's fine. If they want to buy a very rich plan that's got zero deductible they can do that as well. They can spend $200 on a health-insurance plan. They can keep the other $100 to save towards co-pays, doctor visits, medication and whatever would qualify for tax-free purchases on their defined contribution plan. That's what you see a lot of people looking to do right now.
With the economy the way it's been, something I've heard and read a lot about is the sentiment that the notion of a full-time job meaning you'll have a full benefits package will soon become a thing of the past. What do you think?
Brandon Cruz: In the past, people would go join a company and stay with those benefits for 25+ years. Nowadays the tendency, especially for the Millennials, is definitely to change jobs, move around a lot. That introduces a problem with benefits because they're not portable between jobs. So, if you're getting benefits from my company and you leave to go to another company in Chicago, if that company offers benefits, then you're fine. But if that new company is a small startup, isn't offering group benefits or something like that, you've got to go apply for insurance. The problem today is that when you apply for insurance, you're not guaranteed that insurance on the individual market. So you're right, the portability of the insurance is a bit of a problem. Which is why the concept of everybody moving off-group towards an individual defined contribution plan is a lot better because once you buy your own insurance plan it's portable and you can take it with you no matter what job you go to because it's not tied to your job anymore.
Right. Once you buy it, it's yours.
Brandon Cruz: So, the wave of the future -- and you hear about the exchanges coming out -- is there will be a massive shift from group benefits towards individually purchased benefits in the next five years. Massive. If you look at the trends over the last 10 years.
So what's involved with setting up healthcare benefits for your employees if you're a new boss and have no clue where to go or how that works?
Brandon Cruz: The easiest thing they could do is call us. My company. We can walk them through what needs to be done. The easiest thing to do when you're setting up healthcare benefits is to find an agent or an agency that can help walk you through it. You want them to tell you Blue Cross offers these plans, United offers these plans, and here's the price. An agency will actually go on your behalf and negotiate your price for you, which is hugely beneficial and something that's nearly impossible for a company to do on their own, especially if they have no history or experience with insurance companies. You want to go to somebody that's very transparent, open with you, and has relationships with the largest amount of insurance companies and they'll be able to negotiate those benefits on your behalf.
Once you've set it up, how often can you expect to renegotiate your rates?
Brandon Cruz: Once a year. And one more point on the negotiating: If it's a brand new startup, there's not going to be a whole lot of negotiating, it's going to be more the agent guiding the company or the people into what would work best for them. But an agent will ask the right questions.
David Wolinsky is a freelance writer and a lifelong Chicagoan. In addition to currently serving as an interviewer-writer for Adult Swim, he's also a columnist for EGM. He was the Chicago city editor for The Onion A.V. Club where he provided in-depth daily coverage of this city's bustling arts/entertainment scene for half a decade. When not playing video games for work he's thinking of dashing out to Chicago Diner, Pizano's, or Yummy Yummy. His first career aspirations were to be a game-show host.