Health Care’s Cost
With insurance costs rising, some employers are turning to a differentmodel. But will employees find the new trend confusing?
By Meghan McCarthy
Updated: March 13, 2012 | 1:26 p.m.March 8, 2012 | 5:00 p.m.
Last year was a bad one for Mike Remick, as several of his employees were diagnosed with cancer. Thedownside was not just the anxiety and heartbreak that goes with a life-threatening disease, but also what
the treatments did to his company’s health insurance costs.
Remick, who has run the Rochester Athletic Club in Minnesota since 2008, was facing a 38 percent
increase in his insurance premiums in 2012 to keep his company’s Blue Cross and Blue Shield of
Minnesota policy. If he stayed with Blue Cross, Remick said, his employees would have had to pay nearly
$5,000 out of pocket before their health insurance kicked in. One of Remick’s 37 insured workers wasalready working overtime just to cover her portion of the insurance premium. “It’s impractical,” Remick said. “It made us go out and look at what else was out there.”
What he found was Bloom Health, which uses a consumer-friendly website to market itself as the grocery store of health insurance shopping. The setup is simple: Employers give their employees a set amount of money to buy health insurance through Bloom. Bloom curates more than 3,000 individual healthinsurance plans and helps customers choose the one that best suits their needs. With Bloom, Remick was able to budget his health insurance spending. No more waiting for the insurancecarrier to tell him how much he would owe next year. Now he pays between $150 and $425 a month per
employee, depending on age. If he wants to increase the company’s contribution next year, he can. If not,he doesn’t have to. Bloom will help him figu
re that out.Remick says that his company is saving about half of the $38,835 that it was paying monthly for healthinsurance in 2011. He has shared a total of $8,000 with his employees.
As for Blue Cross and Blue Shield of Minnesota? “I’m pretty sure they were happy to see us go,” Remick chuckled. “I was pretty certain they were going to send me flowers on the way out.”
PANACEA OR PANDORA’S BOX?
The 113 percent increase nationally in health insurance premiums over the past 10 years certainly makesthe Bloom model look attractive. Set a price, get insurance companies to compete over individualemployees
instead of whole companies of employees, as they do now
and let the market work its magic.Carl Cudworth, the director of benefits at Houghton Mifflin Harcourt, transitioned 700 retirees in 2011from a Cigna Medicare supplemental plan to an insurance exchange run by Extend Health, which offers189 unique supplemental plans. It was a success, he says, and if the health care law sets up a market
where individualized health insurance plans are possible, he’ll consider expanding the model to hiscurrent employees. “If I had the opportunity to mirror what I’ve done with the post
65 retirees, that’s
something we would have to look at. Any employer out there would have to look at that,” he said.