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> Changing it, a Cigna employee estimated, could save more than $98,000. (Cigna spokesperson Justine Sessions said the insurer only suggests changes when clinic

> Changing it, a Cigna employee estimated, could save more than $98,000. (Cigna spokesperson Justine Sessions said the insurer only suggests changes when clinically appropriate and that cost is never the sole determining factor. She said Cigna does not directly benefit from such savings.) Emphasis mine. Can... someone explain how that makes any sense at all?

jrmski 3y ago
Large employers are often self-insured. But since they lack the expertise and large network of negotiated rates and providers, they typically hire a company in the insurance business to administer their plan. Thus, the employer bears the risk of the claims, and also is the party that benefits when expenditures are reduced.
- jabroni_salad 3y ago
  .... which leads to excellent situations where employers try to get rid of employees who have expensive health problems. Especially if a smaller employer is self-insuring because a decision maker read some blog post about it and thought it sounded neat. Sorry about the cancer!! please go die somewhere that I cant see it thanks.
  - toast0 3y ago
    If the employer doesn't self insure, then their insurer will raise their rates because their employees have a history of expensive health problems. Which still leads to pressure to get rid of those employees. (Unless the employer based coverage is priced like marketplace plans, where only age, sex, and smoking are available to set prices; but I don't think that's the case for most?)
    - ComputerGuru 3y ago
      I don’t believe insurers have that kind of “dynamic pricing” where the rate you pay changes depending on who you retain and who you let go. But my experience is with a large insurer and a school with a hundred or so employees, not something on Microsoft’s scale.
    - lotsofpulp 3y ago
      > then their insurer will raise their rates because their employees have a history of expensive health problems This is illegal since 2011 due to the Affordable Care Act. The only factors allowed to price insurance is age, location, and tobacco use. https://www.healthcare.gov/how-plans-set-your-premiums https://www.healthcare.gov/how-plans-set-your-premiums Even the age factor is bounded by the highest risk age having to be only 3x the lowest risk age (i.e. a subsidy from young to old). The lack of ability to price based on pre existing health conditions is a subsidy from healthy to sick. And for political reasons, we can afford to discriminate against tobacco use, but not sugar or alcohol or sat fats or lack of exercise.
      - toast0 3y ago
        Does that page apply to employer based plans? It's not clear that it's not just discussing marketplace plans.
        chimeracoder 3y ago
        > Does that page apply to employer based plans? It's not clear that it's not just discussing marketplace plans. It applies to all non-Medicare, non-Medicaid, non-grandfathered[0] plans for people under the age of 65. Ironically, once you turn 65, all bets are off: insurers can factor your age into your premiums, and people often get a massive rate hike then (usually prompting them to switch to Medicare). [0] A small percentage of employer-provided pre-ACA plans are grandfathered in, but they're few in number and decreasing over time. If you have a grandfathered plan, you probably know it, because it's required to be disclosed visibly in the plan documents when you enroll.
        ecommerceguy 3y ago
        >>The only factors allowed to price insurance is age, location, and tobacco use. Not necessarily. Self funded plans are underwritten. Fully Insured over 50 fte plans are underwritten. A carrier will underwrite based upon Medical History. Individual Short Term Medical plans are also underwritten. >>It applies to all non-Medicare, non-Medicaid, non-grandfathered[0] plans for people under the age of 65. Incorrect, see above. >>Ironically, once you turn 65, all bets are off: insurers can factor your age into your premiums, and people often get a massive rate hike then (usually prompting them to switch to Medicare). Again, not necessarily, Nearly all Americans over 65 have Medicare, as part A is required. The States regulate these plans so each state may be different in some way. Medicare supplements are often underwritten, but can be guarantee issue, again depends on the State. >>A small percentage of employer-provided pre-ACA plans are grandfathered Correct, these are getting priced out. They are underwritten. If you are on a GF/GM plan, then switching to LFP or similar is likely a smart move.
    - ecommerceguy 3y ago
      >>Which still leads to pressure to get rid of those employees. Can you give a source to this statement or is this an ad hominem? >>but I don't think that's the case for most? Great question, generally the larger the company the better the case for self funding. Keep in mind there are different types of self funding, such as graded funding and level funding. Most employees on employer based health insurance are likely to be on a self funded chassis however that is changing. Not all states provide that data, without that, it's hard to pinpoint an exact number of how many is on what chassis.
  - ecommerceguy 3y ago
    That is illegal and if you know of that situation I implore them to seek council and contact the DOL.
klyrs 3y ago
My guess is that they increase premiums to cover payouts; so the cost of payout is amortized away. The indirect benefit is that their prices are more competitive the less they pay out.
- yamtaddle 3y ago
  Maybe. They've got payout minimums these days, too, but it seems like finding ways they could tweak payouts lower to get as close as possible to that line if they have room to is a pretty direct benefit. [EDIT] I mean I guess what I'm getting at is that if they decide to make the adjustment in treatment, it's going to be because it makes them more money, even if they can't afford to make all of those adjustments they might, or it'd push payouts too low and they'd have to give some money back—finding the option to do so doesn't increase profit immediately, but if they choose to make the change, it's surely because it'll make them more money.
  - deleted 3y ago
    [deleted]
gizmo686 3y ago
Insurance companies must pay out at least 80% of premiums to claims. Any excess gets refunded to policy holders. This means that it is, counterintuitivly, in there interest to spend more on claims, as it makes the 20% profit they are allowed to take bigger. At least until they start to lose clients.
- toomuchtodo 3y ago
  https://www.propublica.org/article/why-your-health-insurer-does-not-care-about-your-big-bills https://www.propublica.org/article/why-your-health-insurer-d... (ProPublica: Why Your Health Insurer Doesn’t Care About Your Big Bills)
- ecommerceguy 3y ago
  Not all plans fall under this regulation.
  - lotsofpulp 3y ago
    Any plan worth having does. If you are offered non ACA compliant health insurance, you should value it at $0, especially since there is no penalty for not having health insurance.
    - ecommerceguy 3y ago
      Incorrect, I know of several TPA's that offer Qualified ACA plans that operate below 80% MLR. I can provide proof for my statement, can you do the same?
      - deleted 3y ago
        [deleted]
      - deleted 3y ago
        [deleted]
      - lotsofpulp 3y ago
        What is a TPA? You are always welcome, even encouraged, to provide proof. I am getting my information from: https://www.healthcare.gov/health-care-law-protections/rate-review/ https://www.healthcare.gov/health-care-law-protections/rate-... >Does this apply to my plan? >It depends. >For Rate Review: These requirements don’t apply to grandfathered plans. Check your plan’s materials or ask your employer or your benefits administrator to find out if your health plan is grandfathered. >For the 80/20 Rule: These rights apply to all individual, small group, and large group health plans, whether your plan is grandfathered or not. I assume grandfathered plans are not ACA compliant, and hence do not have all the provisions that make health insurance worth having (such as out of pocket maximums and zero cost preventative care and appeals processes and other things that set a floor on the quality of healthcare covered by the insurance).
aquaphile 3y ago
"She said Cigna does not directly benefit from such savings." The quote indicates that the employer group was self-insured, and Cigna was the plan administrator. This means that Cigna is not insuring the health plan. Cigna is probably paid a per member per month (PMPM) fee for third party administration (TPA). The actual medical claims and associated costs are directly paid by the self-insured entity (the employer group). Self-insurance can make actuarial sense for companies with >2,000 employees.
- yamtaddle 3y ago
  Ah. Thanks, that makes sense.
- ecommerceguy 3y ago
  In addition there is likely specific and aggregate stop loss coverage carried by a reinsurance carrier, such as AXA, Lloyds or even Cigna papers reinsurance often on their self funded plans.

jrmski 3y ago

Large employers are often self-insured. But since they lack the expertise and large network of negotiated rates and providers, they typically hire a company in the insurance business to administer their plan. Thus, the employer bears the risk of the claims, and also is the party that benefits when expenditures are reduced.

jabroni_salad 3y ago
.... which leads to excellent situations where employers try to get rid of employees who have expensive health problems. Especially if a smaller employer is self-insuring because a decision maker read some blog post about it and thought it sounded neat. Sorry about the cancer!! please go die somewhere that I cant see it thanks.
- toast0 3y ago
  If the employer doesn't self insure, then their insurer will raise their rates because their employees have a history of expensive health problems. Which still leads to pressure to get rid of those employees. (Unless the employer based coverage is priced like marketplace plans, where only age, sex, and smoking are available to set prices; but I don't think that's the case for most?)
  - ComputerGuru 3y ago
    I don’t believe insurers have that kind of “dynamic pricing” where the rate you pay changes depending on who you retain and who you let go. But my experience is with a large insurer and a school with a hundred or so employees, not something on Microsoft’s scale.
  - lotsofpulp 3y ago
    > then their insurer will raise their rates because their employees have a history of expensive health problems This is illegal since 2011 due to the Affordable Care Act. The only factors allowed to price insurance is age, location, and tobacco use. https://www.healthcare.gov/how-plans-set-your-premiums https://www.healthcare.gov/how-plans-set-your-premiums Even the age factor is bounded by the highest risk age having to be only 3x the lowest risk age (i.e. a subsidy from young to old). The lack of ability to price based on pre existing health conditions is a subsidy from healthy to sick. And for political reasons, we can afford to discriminate against tobacco use, but not sugar or alcohol or sat fats or lack of exercise.
    - toast0 3y ago
      Does that page apply to employer based plans? It's not clear that it's not just discussing marketplace plans.
      - chimeracoder 3y ago
        > Does that page apply to employer based plans? It's not clear that it's not just discussing marketplace plans. It applies to all non-Medicare, non-Medicaid, non-grandfathered[0] plans for people under the age of 65. Ironically, once you turn 65, all bets are off: insurers can factor your age into your premiums, and people often get a massive rate hike then (usually prompting them to switch to Medicare). [0] A small percentage of employer-provided pre-ACA plans are grandfathered in, but they're few in number and decreasing over time. If you have a grandfathered plan, you probably know it, because it's required to be disclosed visibly in the plan documents when you enroll.
        ecommerceguy 3y ago
        >>The only factors allowed to price insurance is age, location, and tobacco use. Not necessarily. Self funded plans are underwritten. Fully Insured over 50 fte plans are underwritten. A carrier will underwrite based upon Medical History. Individual Short Term Medical plans are also underwritten. >>It applies to all non-Medicare, non-Medicaid, non-grandfathered[0] plans for people under the age of 65. Incorrect, see above. >>Ironically, once you turn 65, all bets are off: insurers can factor your age into your premiums, and people often get a massive rate hike then (usually prompting them to switch to Medicare). Again, not necessarily, Nearly all Americans over 65 have Medicare, as part A is required. The States regulate these plans so each state may be different in some way. Medicare supplements are often underwritten, but can be guarantee issue, again depends on the State. >>A small percentage of employer-provided pre-ACA plans are grandfathered Correct, these are getting priced out. They are underwritten. If you are on a GF/GM plan, then switching to LFP or similar is likely a smart move.
  - ecommerceguy 3y ago
    >>Which still leads to pressure to get rid of those employees. Can you give a source to this statement or is this an ad hominem? >>but I don't think that's the case for most? Great question, generally the larger the company the better the case for self funding. Keep in mind there are different types of self funding, such as graded funding and level funding. Most employees on employer based health insurance are likely to be on a self funded chassis however that is changing. Not all states provide that data, without that, it's hard to pinpoint an exact number of how many is on what chassis.
- ecommerceguy 3y ago
  That is illegal and if you know of that situation I implore them to seek council and contact the DOL.

klyrs 3y ago

My guess is that they increase premiums to cover payouts; so the cost of payout is amortized away. The indirect benefit is that their prices are more competitive the less they pay out.

yamtaddle 3y ago
Maybe. They've got payout minimums these days, too, but it seems like finding ways they could tweak payouts lower to get as close as possible to that line if they have room to is a pretty direct benefit. [EDIT] I mean I guess what I'm getting at is that if they decide to make the adjustment in treatment, it's going to be because it makes them more money, even if they can't afford to make all of those adjustments they might, or it'd push payouts too low and they'd have to give some money back—finding the option to do so doesn't increase profit immediately, but if they choose to make the change, it's surely because it'll make them more money.
- deleted 3y ago
  [deleted]

gizmo686 3y ago

Insurance companies must pay out at least 80% of premiums to claims. Any excess gets refunded to policy holders. This means that it is, counterintuitivly, in there interest to spend more on claims, as it makes the 20% profit they are allowed to take bigger. At least until they start to lose clients.

toomuchtodo 3y ago
https://www.propublica.org/article/why-your-health-insurer-does-not-care-about-your-big-bills https://www.propublica.org/article/why-your-health-insurer-d... (ProPublica: Why Your Health Insurer Doesn’t Care About Your Big Bills)
ecommerceguy 3y ago
Not all plans fall under this regulation.
- lotsofpulp 3y ago
  Any plan worth having does. If you are offered non ACA compliant health insurance, you should value it at $0, especially since there is no penalty for not having health insurance.
  - ecommerceguy 3y ago
    Incorrect, I know of several TPA's that offer Qualified ACA plans that operate below 80% MLR. I can provide proof for my statement, can you do the same?
    - deleted 3y ago
      [deleted]
    - deleted 3y ago
      [deleted]
    - lotsofpulp 3y ago
      What is a TPA? You are always welcome, even encouraged, to provide proof. I am getting my information from: https://www.healthcare.gov/health-care-law-protections/rate-review/ https://www.healthcare.gov/health-care-law-protections/rate-... >Does this apply to my plan? >It depends. >For Rate Review: These requirements don’t apply to grandfathered plans. Check your plan’s materials or ask your employer or your benefits administrator to find out if your health plan is grandfathered. >For the 80/20 Rule: These rights apply to all individual, small group, and large group health plans, whether your plan is grandfathered or not. I assume grandfathered plans are not ACA compliant, and hence do not have all the provisions that make health insurance worth having (such as out of pocket maximums and zero cost preventative care and appeals processes and other things that set a floor on the quality of healthcare covered by the insurance).

aquaphile 3y ago

"She said Cigna does not directly benefit from such savings." The quote indicates that the employer group was self-insured, and Cigna was the plan administrator. This means that Cigna is not insuring the health plan. Cigna is probably paid a per member per month (PMPM) fee for third party administration (TPA). The actual medical claims and associated costs are directly paid by the self-insured entity (the employer group). Self-insurance can make actuarial sense for companies with >2,000 employees.

yamtaddle 3y ago
Ah. Thanks, that makes sense.
ecommerceguy 3y ago
In addition there is likely specific and aggregate stop loss coverage carried by a reinsurance carrier, such as AXA, Lloyds or even Cigna papers reinsurance often on their self funded plans.