How Do You Spell Employer Health Care Cost Relief? H-M-R-A
The most interesting part of baseball for me is not attending the games, or watching them on TV or even listening to them on the radio. As a true “numbers guy,” I really enjoy looking at the box scores and reviewing the statistics of league leaders. Statistics make a huge difference, not only in the outcome of the game, but also in the ballplayers’ compensation.
Many years ago my dad and I talked about this very subject. He told me how if a major league team wins six out of every ten games, which is just a bit over half of their games, that they have an excellent chance to become the league champion. He also discussed how the difference in compensation between a hitter who hits .280 as opposed to .300 can be significant, even though the percentage difference is minute.
A fairly recent phenomenon in baseball lore has been the rise of the relief pitcher. Up until the 1970s, relief pitchers gained little notoriety. Today however, having a reliable closer can be the difference between a win and a loss. There have even been six closers elected to the Major League Baseball Hall of Fame in the last 30 years. Compared to starting pitchers, effective closers receive extremely high compensation per pitch made.
Relief in baseball can come in the form of an effective closer. Relief in both health insurance premiums and overall health care costs for employers and employees has been AWOL for at least 40 years.
Family group premiums average $17,000 per year while median household income is $53,000 per year. Our short-term problem is that health care costs are unaffordable now for most families. Providing subsidies to suddenly make health insurance affordable does not solve the root problem. It provides only temporary relief. Over the long run, subsidies will exacerbate our health care affordability problem. That which is subsidized tends to become even more expensive. This is something that even my 22-year-old daughter figured out!
We need to consider a different kind of subsidy to eventually lower health care costs and lower them dramatically. Instead of paying tax dollars directly to insurers, the subsidy could be in the form of a financial entity, which assumes more of the employer’s health expense risk over time through a funding mechanism. The typical remedy for employer relief is to shift the costs to employees via higher deductibles, higher cost-sharing and higher maximum out-of-pocket expenses.
Imagine employer relief instead in the form of a financial service entity offering affordable contributions and providing excellent returns. As opposed to increasing deductibles and shifting costs to employees, imagine the employer’s risk being shifted to a financial entity, who has devised a groundbreaking formula on how to pool funds effectively to provide the employer true relief from health care expenses on a first-dollar basis.
Through a revolutionary pooling formula now available to an employer in a funding mechanism called a Health Matching Reimbursement Account (or HMRA™), in a relatively short period of time, many employers, employees and their families could have up to $50,000 of first-dollar risk shifted to National Prosperity Life and Health (NPHM™). Imagine accelerating the growth in pre-funded risk on every group member, who would be earning between 8-10% per month compounding in each employee and dependent’s health reimbursement account. With each ensuing monthly contribution, the crediting rate rises to earn an additional 8-10% per month. Imagine a $300 monthly contribution earning $900 of paid-for benefits in a single month! This is now possible and is something I have been anxiously awaiting to see for quite some time.
NPHM has successfully made this dream a reality. Not only have they imagined this scenario, but they are executing this relief for self-funded employers with the help of a well-respected and long-time established actuarial firm.
This dramatic reduction in risk and cost for employers is not magic. Increasing an employee’s deductible from $1,000 to $50,000 lowers premiums by about 50 percent. The patented and now proven HMRA funding mechanism provides excellent returns on contributions by accelerating the shifting of medical expenses and first-dollar risk from the employer to NPHM.
Lowering group health care costs by raising deductibles is the easy, short-term fix. Funding the deductible through the pooling power of the employer group is the harder, long-term solution that can provide real relief for employers and employees. It is difficult and near impossible to earn eight percent per month on one’s contributions all by yourself.
However, through the benefits of pooling, it is much easier when hundreds or thousands of people per group are harnessing their efforts and placing their pooled accounts together with a financial entity like NPHM. By utilizing the HMRA program, each group participant will accumulate individual, HMRA account balances based on their contributions plus their accelerated monthly crediting with the monthly claim amounts subtracted from the starting balance that month.
Because statistically speaking, the majority of claims will be made by a minority of the participants, the pooling power of the group is harnessed through the HMRA program, for there will be a time when virtually all of the participants are paid out benefits by NPHM. This means the vast majority of participants will increase their balances each year, and NPHM can provide excellent returns inside of the individual member HMRA account balances based on the certainty of intermittent claims from the majority of participants.
Switching from a do-it-yourself investment to a community-oriented sharing technique provides these types of benefits. Let us confront the problem of our costly health care industry and use it as an opportunity to lower costs through shifting the risk from the employer and employee to NPHM and its Health Matching Account program. Why not have claims paid from the first dollar by NPHM instead of the hard-earned dollars of the employer and their employees? Taking the group’s gifts, talents, and resources to strengthen each participant and the group is a great way to get mileage for your money.
Years ago, the popular ad said that relief was spelled R-O-L-A-I-D-S, which was and still is an excellent relief for stomach pain.
The reliever of the year in Major League Baseball received the Rolaids Fireman of the Year award, for the closer who put out many opponents’ fires.
This year, many employers and employees will learn about and institute long-term relief for health care costs by implementing the HMRA program. It is incredible how the return on investment grows over time via paying a bit more up front through pooling in order to pay large claims not only in the near future but even 20 years later.
As in baseball, for a little bit of improvement in our actuarial statistics, by investing up front, the payouts for employers and employees can be considerably higher, which will lower their costs considerably over time. Health care relief for self-funded employers can now be spelled H-M-R-A. National Prosperity Life and Health will not only put out the fires of increasingly unaffordable employer health care costs, but they can also quench the employers and employees thirst for relief by effectively partnering with them to assume their first-dollar medical expense risk.
Don Levit, CLU,ChFC