The Challenge As a business leader, what comes to mind when you hear the term “health insurance”? If you are like other mid-market businesses, you’ve probably been frustrated with continual cost increases, as well as the need to pass on higher out-ofpocket costs to your employees. After all, benefits are one of the top costs of most businesses and needs to fit within a limited budget. If you are frustrated, it is both justified and understandable, particularly since insurance company profits have reached new highs and are now among America’s top stock picks. For instance, from 2018: “The S&P Managed Care sector, made up of the largest insurers, has gained more than 1,100 percent during the market’s bull run. That’s more than twice as much as the gains in the biotech sector. The iShares Nasdaq Biotech Index ETF is up about 500 percent during the period.” https://www.cnbc.com/2018/08/19/health-insurers-are-a-big-winner-duringlong-running-bull-market.html
More recently, Anthem reported a quarterly revenue increase of 16.81% for the 2nd quarter of 2020, and 12-month revenue increase at the time of 17.28%. Not too shabby, but since 2020 was a year where many avoided care because of Covid-19, could it have been a fluke? Nope, their previous year (2018 to 2019) was 13.15%. Wouldn’t we all like our businesses to grow like that, particularly if we are a mature one. (https://www.macrotrends.net/stocks/charts/ANTM/anthem/revenue)
SPOTLIGHT
The Kaiser Permanente Foundation recently published their latest results in terms of annual cost increases. Keep in mind that these are all cost increases after plan changes, including deductible, co-pay and out-of-pocket costs for plan members being increased – meaning higher cost and less benefit. The CBA Solution CBA of Georgia decided to get ahead of the challenge and has developed a solution to decrease cost volatility and allow the stabilization to provide member health plans an upside in years where there are low claims and protection in bad years. A series of webinars will be offered over the next several months to provide details, but here are some highlights in terms of its results and benefits: • The model has a 14-year history of delivering average renewals that are 10% below national averages after “good” claim years and 20% lower after “bad” claim years. • A portion of each company’s premium is put into a fund that pays for high claims for members (i.e., employers) participating in the solution. If there is money left in the fund at the end of the year, it is distributed to participating members and those who help make it successful, even companies who have bad claim years. Distributions have been paid out over 75% of the time.
J an u ar y/ Fe b r u ar y 2 0 2 1 | G e or g i a C o m m un i ti es F i rs t | 11
