Chronic illnesses and expensive hospital procedures are often the culprits that drive up an employer’s health insurance rates at a renewal.
The creation of the public exchange on October 1, 2013 led some employers to ask if they could shift those high cost employees to the public exchange. In practice, an employer could shrink the hospital and doctor network to make the employer-sponsored plan or raise drug co-pay to make the employer-sponsored plan unattractive to those with chronic illnesses. In conjunction, an employer would offer to buy that high-risk population a platinum plan on the public exchange. For the cost of a platinum plan, the employer removes the high-risk from their plan that may accumulate hundreds of thousands of dollars of medical claims.
This seems like a win-win for the employer and the employee, but shifting high risk employees from employer plans is prohibited for other public insurance options, so many believe its only a matter of time before this strategy is illegal as well. It’s unclear if any employers have taken advantage of this strategy.