When Wayne Hansen co-founded Old School Bagel restaurant five years ago, his wife went back to work as a teacher. She basically had to, so his family could get health insurance, Hansen said. He and his wife have four kids, including a special-needs child who sees a cardiologist yearly, he said.
They were glad to have the medical coverage, Hansen said. Still, their share of the premiums was exorbitant — nearly $1,200 a month, including $580 for him alone, he said.
“There wasn't much left over from my wife's check,” he said. “It was like she was working just for health insurance.”
Hansen, 40, recently saved his household some $400 a month by rolling off his wife's health plan and retaining Salerno Health, a new Oklahoma City startup that offers direct primary, specialty and surgical care on a prepaid basis, starting at $49 a month for individual primary care.
Hansen, who bought a catastrophic policy in case he needed emergency or hospital care, since has trumpeted the Salerno option with his employees and anyone else who'll listen.
Meanwhile, with the major health care reform mandates just more than a year away, MedEncentive, another Oklahoma City startup, has won the attention of two of the nation's top reinsurance companies for its Internet-based patient-doctor wellness product that's been proven to cut costs through better managed care.
Counting the costs
Meanwhile, employers statewide are trying to figure out how mandates will affect their bottom lines.
Hundreds of human resources professionals statewide attended Crowe & Dunlevy's labor and employment seminars last week in Tulsa and Oklahoma City, where director Cori Loomis gave the keynote luncheon presentation “Holy Healthcare, Batman! The Affordable Care Act Was Upheld. Now What Do We Do?”
The answers for employers aren't as simple as initially thought, Loomis said.
“Many may be subject to the ACA and not realize it,” Loomis said. The law requires businesses with 50 or more full-time-equivalent employees to provide health insurance, but the key is the word “equivalent.” Part-time employees, or those who work fewer than 30 hours, are included in the calculation, she said.
Companies — such as restaurants, clothing stores, tax preparers and Oklahoma City's Sunbelt Staffing, whose vice president, Marla Robinson, attended the conference — need to run calculations, Loomis said.
Robinson said Sunbelt, which employs six full-time workers and 40 to 150 temporary workers annually, is looking at pairing a high-deductible health plan with a health savings account, which provides tax-sheltered benefits to Sunbelt and offers workers a way to save for their medical costs with an account that rolls year to year.
Meanwhile, larger employers can't simply compare their annual cost of providing health insurance with the cost of annual penalties, Loomis said. She gave the example of BancFirst, whose executives recently told state legislators that it would be cheaper to pay health care for the additional employees they estimate covering, with the health care act's automatic enrollment mandate for companies with 200 or more employers, than not to provide health insurance — $410,000 annually compared with some $1.2 million.
The bank's estimates accounted not only for the various penalties but also the cost of increasing salaries so employees could buy insurance elsewhere, Loomis said. If Oklahoma chooses not to expand its state-federal “SoonerCare” Medicaid program, lower-income employees who would have qualified under the expanded program will be looking to their employers for the health insurance the Affordable Care Act requires them to have, starting in January 2014, Loomis said.
SoonerCare is in a wait-and-see mode, spokeswoman Jo Kilgore said.
“It's up to the state leadership whether the program expands or not,” Kilgore said. If it does, the state expects to cover about 200,000 qualified Oklahomans in addition to its estimated 1 million current members, she said.
Curiously, enrollment in Insure Oklahoma, a SoonerCare program that subsidizes low-income self-employed workers and those who work at businesses with 99 or fewer workers, has dipped, Kilgore said. Member and employer enrollment was 9,213 in September, compared with 10,032 a year ago.
Oklahoma City independent insurance broker Michael Shaw of Andreini & Co. isn't surprised.
“Oklahoma's small employers don't want to offer health care, then after January 2014, pull it and pay the penalties. That would make employees mad,” Shaw said.
In Oklahoma's fully-insured health insurance market, health reform has eliminated much of the competition, with smaller companies bowing out because of narrow profit margins, Shaw said. There are now only three major insurers: Blue Cross/Blue Shield; United, which bought Principal; and Aetna, which bought Coventry, he said.
That leaves consumers with fewer choices and higher prices, he said. The Kaiser Foundation cites an incremental increase of 4 percent in health insurance costs this year, but Shaw said increases across the fully-insured market range from 5 percent to 40 percent.
Florida journalist Nick Tate, author of “ObamaCare Survival Guide: The Affordable Care Act and What It Means for You and Your Healthcare,” believes the law will help sole propietors but will stunt the growth of many companies.
“Why would an employer of 25 or fewer workers that offers health insurance grow, if they stand to lose tax benefits of 30 percent to 50 percent?” Tate said. “And why would an employer under 50 grow to 51, where they're subject to the mandate to provide workers health insurance?”
Such questions are some of what spur Oklahoma City startups such as Salerno Health (salernohealth.com), which launched June 1 with six primary care physicians in the greater Oklahoma City area, and MedEncentive (medencentive.com), which taps psychosocial motivators between patients and doctors for more efficient health care and reduced costs.
Salerno's fees for direct medical services range from $30 for an office visit, which includes labs and X-rays, to $50 for an MRI, which Old School Bagel co-owner Wayne Hansen has scheduled for later this month to address a painful shoulder injury he's lived with for the past 16 months.
Health insurance never was intended to cover preventive care costs, Salerno CEO David Rothwell said.
Business owner Doug Tolliver of Masters Heating and Air in Del City is paying Salerno the $49 base rate for any of his 11 employees who wants the medical coverage.
“I want to make this a place where people want to work,” Tolliver said. “If you find good people, you gotta keep them.”
Sort of like Salerno Health, Variety Care — which has several community health centers across Oklahoma County — is coordinating with small churches to provide a menu of prepaid services per member, per month, to their staffs, Chief Executive Officer Lou Carmichael said.
“We are who people go to when their employer is unable to provide insurance or access to care,” Carmichael said.
Of Variety Care's 37,000 medical patients, half are adults, she said. And of those, 40 percent are uninsured, and most work at least one part-time job, she said.
“Community clinics — which offer care on a sliding income-based scale to everybody — are well-positioned, with medical, vision, dental and behavioral health services, to care for diabetics and other complicated patients,” Carmichael said. “We save the system money, and citizens huge suffering from things like blindness, amputation and dialysis. Early care is always cheaper and less invasive.”
Meanwhile, New York-based AIG and IHC Risk Solutions, two of the country's top 10 reinsurers, have agreed to offer a 5 percent discount on stop-loss insurance to self-insured companies who use the online cost-containment product of 8-year-old MedEncentive of Oklahoma City. Stop-loss protection insures companies who offer self-funded health plans against deep losses.
Independent research studies found return on investment on MedEncentive's product — which has been sold in Oklahoma, Washington and Pennsylvania for $3 per member per month — ranges from 3-to-1 to 17-to-1, considering financial incentives and fees, CEO Jeff Greene said.
“Based on best practices, the product educates and tests patients on their understanding and management of their respective diseases, be that hypertension or diabetes, and merges behavioral economics with the psychosocial motivators between us and doctors,” Greene said.
Patients stand to prosper and have their co-pays waived, he said, while providers bolster their reputations and receive some $15 rewards on office visits.
“It encourages both parties to up their games,” Greene said.
at a glance
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