As I was explaining the other day to an acquaintance, one of the biggest challenges regarding the ACA viz insurance is the lack of a risk-assessment mechanism. In both the individual and group markets, this means that there are no health-related questions allowed, rates are based solely on age, sex and location (and, in the individual market, on tobacco use as well).
Which is equivalent to an auto insurer having to charge the same rate for a guy with 3 DUI's and 4 speeding tickets, and the soccer mom with a clean sheet.
But that's all theory and concept; how does this apply in "the real world?"
Readers may recall my recent post about my client who had just lost another valued employee to a competitor who offered health insurance ("benefits"), and who was for the first time considering taking the plunge himself. He turned to me for help, and I explained that there were two "paths" to consider: the simple (but expensive) ACA one, and the potentially cost-savings one (AHP):
Rates for ACA plans require merely a list of employees, their ages, sex and marital status, and the nature and location of the business. No medical info is necessary. So groups with 3 employees on chemo and 4 on dialysis pay the exact same rate as those with relatively healthy employees.
On the other hand, AHP plans require medical histories, current meds and the like, and thus the process requires more effort (by the agent and by the employer and employees). But healthier groups can benefit greatly (one can argue the "fairness" of this, but that's another post). And sometimes, they can benefit 'bigly.'
In this case,the benchmark ACA plan we looked at would have a total monthly premium of about $3,700 (keep in mind, this is a 3-employee group, two singles and a family plan).
By contrast, the AHP quote came in at less than half of that: $1,550 per month.
And all it really took was maybe an hour's extra work, total.
Sweet, no?
Which is equivalent to an auto insurer having to charge the same rate for a guy with 3 DUI's and 4 speeding tickets, and the soccer mom with a clean sheet.
But that's all theory and concept; how does this apply in "the real world?"
Readers may recall my recent post about my client who had just lost another valued employee to a competitor who offered health insurance ("benefits"), and who was for the first time considering taking the plunge himself. He turned to me for help, and I explained that there were two "paths" to consider: the simple (but expensive) ACA one, and the potentially cost-savings one (AHP):
Rates for ACA plans require merely a list of employees, their ages, sex and marital status, and the nature and location of the business. No medical info is necessary. So groups with 3 employees on chemo and 4 on dialysis pay the exact same rate as those with relatively healthy employees.
On the other hand, AHP plans require medical histories, current meds and the like, and thus the process requires more effort (by the agent and by the employer and employees). But healthier groups can benefit greatly (one can argue the "fairness" of this, but that's another post). And sometimes, they can benefit 'bigly.'
In this case,the benchmark ACA plan we looked at would have a total monthly premium of about $3,700 (keep in mind, this is a 3-employee group, two singles and a family plan).
By contrast, the AHP quote came in at less than half of that: $1,550 per month.
And all it really took was maybe an hour's extra work, total.
Sweet, no?
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