The debate about association group, group health buying consortiums, and multiple employer welfare associations (MEWAs) continues at both the state and federal level. All of these programs are either "employer provided" (coming under state law) or "employer sponsored" (coming under federal ERISA and Department of Labor jurisdiction). There is a continuing tug of war for jurisdictional control playing out in state and federal courts. All of this activity is in lieu of a Congress-passed patient's bill of rights.
The public and the insurance agent community are busy digesting the new alphabet soup of the group health market, with HSAs (health savings accounts), HRAs (health reimbursement accounts), HRA/FSA (flexible spending account) combinations, VEBAs (voluntary employees beneficiary associations) and VEMAs. Other problems slow the growth of these progressive programs. The mixed decisions coming out of the Supreme Court over the past four years have created a minefield for the transition from the old rationed health system of managed care to the new financed care, consumer-driven options, of the 21st century.
A new market for group health insurance is emerging that is not employer sponsored or employer provided. It comes under the Labor Relations Act of 1946 -- under ERISA and DOL jurisdiction. This is a market of non-affiliated unions, associations, and guilds.
The union-sponsored group plan has no participation requirements. It is made available to both W2 and 1099 employees, using any sound non-discriminatory workplace criteria. The only discrimination that is tolerated is by class of employees as to cost-sharing criteria.
This market is growing rapidly across the United States. The concept's growth is being advanced by employee introduction, not employer contact. Its built-in flexibility solves field underwriting problems that few other group market segments can handle. The ability to underwrite medically and adequately price makes this a good tool for this market.
This is not a guarantee issue replacement for a state guarantee fund.
Properly understood by a knowledgeable insurance agent, union-sponsored group plans can open up markets that otherwise could not be served in the retail market. Understanding that first-dollar medical programs have led to double-digit rate increases, the agent can introduce HSA and HRA or FSA programs into this market. The agent no longer has to contend with an eligibility list from a commercial carrier because the rules are specific for this market.
This affinity group market opens up SIC codes that previously had no place to go. Small group reform rules don't apply. These programs can transcend state lines for a single employer. These programs use national PPO networks to provide discounts for the medical services they provide. Wellness, employee assistance programs (EAP), and 24-hour nurse hotlines are considered preventive care allowable benefits under these programs. These plans can go down to two eligible employees to constitute a group.
Employees must introduce these programs to their respective employers. The employer "invites in" the union-sponsored program to explain how the process works. The employer signs a bargaining agreement allowing the employees to have a plan of benefits.
This is a voluntary benefit group program of medical and other benefits. Each employee selects a program of medical and other benefits that is right for him or her. Employees complete the necessary enrollment papers to join the union, pay annual dues, and select the premium mode that is easiest for them.
This voluntary benefit underwritten approach makes sense for all participants -- employee, employer, and insurance carrier. This does away with the "one size fits all" approach to traditional group plans. It also allows the employer to determine the level of financial participation in which it will be involved: all, some, or none at all.
Most important, what is being delivered is real insurance coverage (not a "mini-med" or "limited benefit" plan). These plans are the high deductible health plans (HDHP) the public is buying in the retail market.
Producers who work in the health insurance market know that change is occurring. How the producer harnesses change to build or expand his or her group benefit practice is a personal decision. The market I describe in this article transcends state law, throwing away what many consider to be "golden handcuffs."
Since 1997, tax law changes affecting the group health benefit business have become a substitute for Congressional action, hampering much of the creativity that insurance producers bring to the table. Here is an opportunity for the producer to separate himself from the competition, creating the opportunity for unhampered growth in what will be a challenging 2005 plan year. People are looking for fresh ideas and consulting advice that allow for long-term planning for health care expenses.
I spend most of my productive group marketing time in this market. It can be as profitable for other producers as it is for me.
