Chapel Hill insurance industry veteran Patrick Long has launched Hero Health, a new health insurance plan for companies that employ 25 or more workers, with the help of two major N.C. business groups.
Their goal is to offer a company-controlled insurance plan that leads to lower costs by leveraging lower-cost direct contracts with physicians and other health care providers.
He has helped companies set up similar insurance plans for many years through his company, Lumina Benefits, but now has some influential partners.
Long has sold a significant stake in Hero Health to Catapult, which formed earlier this year through the February merger of two large employer associations: Raleigh-based CAI and Charlotte-based The Employers Association, or TEA. Catapult has 2,300 employers as members, mostly in North Carolina, who rely on the group for advice on human resources issues, salary surveys, best practices training and benefits consulting.
Additionally, the NC Chamber has an agreement with Hero Health to educate members on becoming better buyers of health insurance. NC Chamber will help publicize the program with its membership of more than 1,000 N.C. businesses.
Health insurance in North Carolina and nationally is now dominated by five large companies: Blue Cross Blue Shield, United Healhcare, Cigna, Humana and Aetna. A new entry such as Hero Health won’t threaten them, but the involvement of the two big N.C. groups suggests the demand for new approaches as health care costs mount.
Bigger companies already largely rely on self-funded insurance. Long notes that nearly all companies with 1,000 or more employees and the majority of those with more than 200 employees have bought “stop-loss” insurance that limits their risk in the event of catastrophic health claims. But only 31% of employers of less than 200 people have such plans.
“Educating executives of these businesses on how to properly purchase stop-loss is key. Stop-loss is the bridge that allows employers to move from company control of their health plans,” Long says, “You cannot get the claims data you need to improve health outcomes nor the savings you desire for higher incomes, without stop-loss.”
Catapult has organized online webinars and will soon begin in-person seminars to promote Hero Health across the state. They are also launching training classes for insurance brokerages around the state that want to offer the plan. If brokers pass the class and agree to being transparent about commissions, they will receive a standard flat fee for selling Hero plans.
Independent physician practices in North Carolina want to work directly with Hero Health because they can charge less for images or procedures while receiving more money than from the major insurers, Long says. “Our direct contract providers have no overhead for collections or burdensome paperwork. The savings are so significant for the employer that we insist they reward their workers with $0 out of pocket. It’s a rare win-win-win for people, plans and providers.”
Hero Health promises to lower the cost of health insurance for employers by cutting out administrative costs that Long says are widely considered exorbitant by many CEOs and human resource executives. “Insurance companies are the middlemen between hospitals and regular people and they have the gall to call themselves the payors, when they pay nothing. They just extract precious capital from companies and working people.”
In comments that are included in Hero Health’s promotional material, the leaders of the NC Chamber and Catapult explained their views.
NC Chamber President Gary Salamido said. “Where we are today with our health care value is not sustainable. We have to be better. If we’re not better at getting healthier and if we’re not better at lowering costs and getting them more predictable our communities won’t be healthy, our state won’t be healthy, and North Carolina’s competitiveness to retain and attract jobs won’t be healthy.”
A recent NC Chamber study concluded that the only way for North Carolina to become a top 10 state for health care value is to align the supply chain around a common goal, while not placing the interests of any one member above another.
Catapult Co-CEO Bruce Clarke said, “North Carolinians deserve better health outcomes and better incomes. And that’s why we are promoting Hero Health Plans to our members.”