Integration. It’s the new buzzword and a major theme at mostmulti-line carriers (the new term for major medical carriersoffering supplemental products).

Specifically, the topic is integration of supplemental workplacevoluntary benefits—such as medical gap, critical illness andaccident insurance—into the medical plan.

As a consultant to several of the leading multi-line carriers, Ican assure you that, if implemented correctly, this integrationwill be an absolute game changer.

At a recent LIMRA conference on voluntary benefits in Chicago,UnitedHealthCare executive Diane Souza shook up the crowd with herpresentation on UHC’s vision and plans for integrating WVB into themedical plan. Not only did Souza share cutting-edge plan designconcepts, but she described truly innovative ideas to leverageUHC’s ready access to their members’ health data. After hearingSouza speak, one attendee with a leading voluntary benefits carrierapproached another UHC executive and, with a sense of awe,confided, “We can never do that. If you pull that off,we’re done.”

The first multi-line carrier to introduce a medical plan designthat integrates these supplemental plans will revolutionize healthinsurance—never mind completely changing the game for workplacevoluntary benefits.

Frankenstein plans

Interestingly, some of the most progressive benefits brokersalready are cobbling together radically innovative “health plans”that incorporate a very high deductible (from $3,500 to as high as$10,000) along with supplemental plans such as gap, CI andaccident. The high deductible drives down the baseline medicalcost, while the supplemental plans fill the gap of the deductibleand help employees insure against the risk exposure of thedeductible.

But these are what I call “Frankenstein plans,” exceptionalhealth plans that are, like Doctor Frankenstein’s famous monster,highly functional but have been stitched together in a ratherinelegant and piecemeal fashion. While these plans literally aregetting brokers standing ovations from employees during groupmeetings, they won’t win any beauty contests.

But these Frankenstein plans do offer a highly instructive modelfor the forward-thinking medical carrier.

The iPhone inspiration

While these Frankenstein plans provide a model, the smartestmulti-line carriers will look to Steve Jobs and the iPhone forinspiration on best practices for implementing this model.

Before the iPhone, tech-savvy consumers had access to a widerange of useful tech devices, including cell phones, mp3 players,digital cameras, GPS, video cameras and laptop computers.We carriedour cell phones and mp3 players, had GPS in the car, and used ourcomputers for mobile email and Internet browsing. Some of us hadrudimentary cameras in our phones, but even then we carried ourtwo-megapixel digital camera with us to capture special moments. Wegrabbed our video camera when we wanted to record specialoccasions.

Like today’s innovative brokers who are busily bolting gap, CIand accident plans to the medical to create a new and better typeof health plan, we could have duct-taped our digital camera to ourcell phone, along with our video camera and GPS. Then we could havetaped that mass of electronics to our laptop. Unsightly andungainly, to be sure—and quite impractical.

But in a manner of speaking, that’s exactly what Jobs did whenhe created the iPhone. He made it all so elegant and integrated, sopretty and sleek. No stitches, no duct tape. Now we had all ofthose multiple devices and functions—phone, mp3 player, digitalcamera, GPS, web browser, email, video camera, Internet access—available in one convenient platform.

Steve Jobs’ real innovation

But Jobs’ understanding of integration went far beyond justphysically integrating these multiple devices into a singleplatform. In the iPhone, these functions are seamlessly integratedin their actual functioning. All of the formerly separateparts work together in a way that makes us forget they once wereseparate. And this is Jobs’ genius.

Use the iPhone’s camera to take a picture, attach it to anemail, insert your message and click send.

Go online with the iPhone’s browser, search for restaurantreviews, tap the phone number of your selection, and speak with thehostess to make reservations.

Now tap on the restaurant’s physical address and have the GPSdirect you straight to your table. After dinner, use the iPhone toshoot some video of your children’s silly dance on the sidewalk,add some music from your mp3 player, then email your videomasterpiece to their grandparents. All in a matter of seconds, withease.

Jobs’ genius was in realizing that the challenge—and the realvalue to users—was the integration of the functions, not merely thedevices.

So let’s apply Jobs’ concept of integration to medical plans.Say, for instance, you have a $3,500-deductible medical plan and ahospital indemnity plan from the same carrier. Because of aninfection, you’re admitted to the hospital. After your admissionand three-day hospital stay, your carrier automatically sends you acheck for $2,200 from your hospital indemnity plan: $1,000 foradmission plus $400 for each day you are hospitalized. You can usethat cash to help pay your out-of-pocket share of the hospitalcosts.

Two plans that function as one—that’s integration offunction.

For the multi-line carriers, this should be a relatively simplechallenge. As the administrator of the medical plan, they have allthe data necessary to make this hypothetical situation areality.

The future is here

In fact, Aetna already has done this with their voluntaryhospital indemnity plan, which integrates with their medical plans.As the medical carrier, Aetna knows when the insured has beenadmitted to the hospital and the length of his stay, so the naturalnext step is to have the hospital claim on the medical planautomatically trigger the benefit payment by the supplemental plan.Steve Jobs would be proud.

In an article about Aetna’s new strategic alliance with AllstateBenefits to market Allstate voluntary plans to Aetna’s 17 millionmembers, I stated that this should be a huge wakeup call to thetraditional voluntary carriers. Aetna’s integration of theirhospital indemnity plan with the medical should be an alarming shotacross the traditional carrier’s bow.

Now the challenge remains for a multi-line carrier to actuallyintegrate these supplemental benefits fully into the medical tocreate a new kind of health plan. Aetna’s integration play gives atantalizing hint of what is possible with medical plan design usingthese supplemental plans.

Here’s the future

So let’s imagine what a $5,000 deductible health plan fullyintegrated with a medical gap plan, critical illness insurance andan accident plan might offer the insured (cue dream sequence musicand graphics).

Imagine: Following a serious fall from a ladder, Hector is takento the ER with a severely broken leg and a concussion. Afteroutpatient treatment to set the leg, follow-up doctor visits, and acouple of physical therapy sessions, the medical expenses total$4,370, which falls entirely on Hector since he has made nocontribution toward the deductible this year. But his carrierautomatically sends Hector a check for the full $4,370 to cover hisout-of-pocket medical expenses. This $4,370 check is provided bythe accident insurance portion of the medical plan.

Imagine: During a routine office visit, Allen is diagnosed withcancer. Once the doctor submits a claim coded with the cancerdiagnosis, Allen is automatically sent a check by his carrier for$5,000 to be used however he chooses: out-of-pocket medicalexpenses, household bills, etc. This $5,000 check is provided bythe critical illness insurance portion of the medical plan.

Imagine: A very pregnant Sarah is rushed to the hospital by hernervous husband. After a complication-free delivery of a healthygirl, the hospital bill totals $7,430. Sarah’s medical plan coversthe $2,430 above the deductible but the carrier also pays $5,000directly to the hospital to cover Sarah’s deductible. The $5,000payment to the hospital is provided by the medical gap component ofthe medical plan.

(Note: To avoid first-dollar coverage and preserve theconsumer-driven health care goal of ensuring the employee has skinin the game, the accident and medical gap plans should include adeductible and possibly even co-pays.)

Seamless integration

In these hypothetical examples, the carrier uses the integratedsupplemental plans to fill the deductible gap. But notice theseamless integration. No claim forms to fill out. No paperwork. Nosense that there are multiple insurance policies in play. Just anautomatic payment to the insured or to the provider to cover thedeductible. To the insured, this is just a very benefits-richhealth plan.

This is a big part of what only a medical carrier can do withthese supplemental benefits and why the multi-line carriers are onthe cusp of a revolution in plan design. The first multi-linecarrier to crack the code and implement a totally integratedmedical plan will dominate the market.

With iPhone-like seamless integration and functioning, thesetruly integrated health plans can provide the insured with more andricher benefits for the same premium as a $1,500-deductible PPOplan.

We all know how the iPhone revolutionized the smartphone market.That the iPhone went on to capture 28 percent market share shouldinspire—and motivate—multi-line carriers to make it a top priorityto be first to market with a health plan that thoroughly integratesthese supplemental plans with the medical.

Nelson Griswold, a former senior executive with a nationalenrollment firm, is an expert on workplace voluntary benefits,consultative selling and cross-selling. He can be reached at (615)656-5974 or [email protected].