Nineties throwbacks have swept through music, television and fashion. Some startups want to bring a bit of that vintage feel to your workplace health insurance plan.
Health maintenance organizations drove down costs but were painted as villains in that decade for limiting patient choice, rationing care and leaving consumers to grapple with high bills for out-of-network services. But some features of the plans are regaining currency. Companies reviving the model say that new technology and better customer service will help avoid the mistakes of the past.
Rising health-care costs and dissatisfaction with high-deductible plans that ask workers to shoulder more of the burden are pushing employers to consider new ways of controlling spending—and to rethink the trade-offs they’re willing to make to save money.
Medical costs have increased roughly 6 percent a year for the past half-decade, according to PwC’s Health Research Institute, outpacing U.S. economic growth and eroding workers’ wage gains. Some employers, such as Amazon.com Inc., Berkshire Hathaway Inc. and JPMorgan Chase & Co.—wary of asking workers to pay even more—are trying to rebuild their health programs.
Barry Rose, superintendent of the Cumberland School District in northern Wisconsin, went shopping recently for a new health plan for the district’s 290 employees and family members after its annual coverage costs threatened to top $2 million.
“How do we provide quality, affordable and usable health care for employees,” said Rose. “I can’t keep taking money out of their paychecks to spend on health insurance.”
The company he picked, called Bind, is part of a new generation of health plans putting a tech-savvy spin on cost controls pioneered by HMOs.
Bind, started in 2016, ditches deductibles in favor of fixed copays that consumers can look up on a mobile app or online before heading to the doctor. Another upstart, Centivo, founded in 2017, uses rewards and penalties to nudge workers to get most of their care and referrals for specialists from primary-care doctors.
For many years, employers offered health plans that paid the bills when workers went to see just about any doctor, imposing few limits on care. The companies themselves usually paid much or all of the premiums.
Confronted with rising costs in the 1990s, many employers switched to HMOs or other forms of what became known as managed care. The switch worked, helping hold health costs down for much of the decade.