Many unknowns remain when it comes to the post-reform world of health insurance, but Cigna’s president and general manager of the MidSouth region sees a few trends emerging.
Rich Novack, who oversees the six-state region of Georgia, Alabama, Tennessee, Arkansas and Kentucky for the Connecticut-based insurer, sat down with the Nashville Business Journal Monday for a conversation on how the insurance world is changing and what role Cigna expects to play in that transformation. Here are highlights of the conversation:
- It’s too early to tell what the exact effects of reform and the insurance marketplace will be. Although the first-ever open enrollment period for the Affordable Care Act’s online insurance marketplace is now over, it will be a while before we see exactly how reform has changed insurance trends. First, Novack noted, we don’t yet know how many of the more than 8 million Obamacare enrollees have paid their premiums and therefore actually have insurance. Furthermore, it will take about two years to see full data in terms of the morbidity and acuity of the newly insured, as well as trends in patient care and the sustainability of demand – factors that will have the most influence on how “affordable” expanded coverage really is.
- Employer responses to the law cover a full spectrum, with no standard reaction across the board. While some are predicting small business owners – especially those who will face either no penalties or minimal costs for not insuring employees – to drop coverage “in droves” in the coming years, Novack said he’s heard from employers “on total opposite ends of the spectrum” when it comes to what they want their coverage to look like. Some see health insurance as a cultural touchstone of their company, he said, and would never consider dropping it, while others say they offer it only to fulfill a “societal responsibility” and would drop it in a heartbeat if they could. Although there’s no one right answer, Novack added, he expects trends will emerge down the road, with some employers at the front end of change and others at the back.
- Employers are seriously embracing the idea of self-funding. Novack has witnessed a shift to an increased number of employers choosing to self-fund their benefit plans, taking on risk themselves and saving as much as 5 to 6 percent yearly on their health costs. Self-funding is easier for large employers, Novack said, and the level of risk you take on is contingent on the stability of your company’s risk profile, so companies considering the change should be sure to talk seriously with their consultants and brokers about what makes the most fiscal sense for them given what they want their benefit plan to look like.
Date: Apr 29, 2014