Scott Byrne (Courtesy photo)
(This is a contributed guest column. To be considered as an MJBizDaily guest columnist, please submit your request here.)
On top of unequal access to basic banking services and a prohibition on normal federal tax deductions, cannabis employers who operate legal businesses and create thousands of jobs – competing for talent with companies in virtually every other industry – have lacked access to traditional employee-benefit solutions.
That is beginning to change. There is growing interest in self-funded health plans and healthcare captives among cannabis employers.
Healthcare captives have been used for decades by employers seeking greater control over their company health plans, more visibility into claims and an opportunity to manage costs collectively.
What’s new is a recognition that these tools may have particular value for cannabis, an industry whose employers face a distinct set of challenges.
What is a healthcare captive?
In simple terms, a healthcare captive can be thought of as a cooperative purchasing and risk-management structure.
Instead of each employer approaching the health insurance market entirely on its own, participating employers pool certain risks and resources. Employers can retain responsibility for predictable, day-to-day claims while using insurance and the captive structure to protect against large, unpredictable claims.
For smaller and midsize employers, that distinction can be important.
A catastrophic medical claim can create a financial challenge that is difficult for a smaller employer to absorb. At the same time, purchasing a traditional fully insured health plan can limit an employer’s visibility into what is actually driving its healthcare spending.
Self-funding changes that equation by giving employers greater access to their own claims information. Instead of looking only at the premium they pay, employers can begin to understand what is happening underneath that premium:
- What conditions are driving utilization?
- Where are employees accessing care?
- Are there opportunities for earlier intervention?
- Are pharmacy costs increasing?
- Are employees using expensive forms of care because they do not know about lower-cost alternatives?
Data can turn those questions from assumptions into management decisions.
What healthcare coverage do cannabis employers need?
That is particularly relevant in cannabis, where employers are competing for employees in an industry that has matured dramatically over the past decade. Cannabis employees have healthcare needs that are not fundamentally different from those of employees elsewhere. But the industry has its own workforce characteristics and business environment.
Behavioral health is one example. In developing Humboldt Health, a healthcare captive program designed specifically for cannabis employers, we at Blackwell identified behavioral and mental health as an area deserving particular attention. These conditions exist across every industry, of course. But research indicates a meaningful prevalence of behavioral-health needs within the cannabis workforce.
That led us to incorporate accessible virtual behavioral health services into the program.
But virtual care is only one component of the strategy. It is important to distinguish between virtual care and a comprehensive health plan. Virtual care can provide a convenient starting point, but many medical conditions require an in-person physician, specialist, diagnostic testing, or other services.
The goal, therefore, should not be to replace the traditional healthcare system. It should be to help employees navigate it more effectively. That means combining virtual access with a broader provider network and tools that help employees identify the appropriate next step in their care. It also means giving employers better information about what is happening inside their health plans.
How can healthcare captives help cannabis businesses?
A healthcare captive can provide regular claims analysis that allows employers to identify emerging trends and potential areas for intervention. That might involve behavioral health, musculoskeletal conditions, oncology, pharmacy utilization or other areas of healthcare spending.
The idea is to not just reduce spending, but to spend healthcare dollars more intelligently. And that distinction matters, as the cheapest health plan is not necessarily the best health plan. Employers need to balance cost with access, employee experience and the quality of care available to their workforce.
A well-designed self-funded plan can also give employers greater flexibility in determining how their benefits are structured. Each participating employer can establish their own plan design, including deductibles and out-of-pocket requirements. The captive provides the infrastructure and risk-management framework around that individual plan.
Pharmacy access is also important. Prescription drugs represent a significant portion of employer healthcare spending. Employers therefore need visibility not only into medical claims but also into prescription utilization, pricing and rebates.
Has marijuana rescheduling changed cannabis health insurance?
The opportunity for cannabis employers is bigger than simply finding another health insurance product. It is about moving from a passive approach to healthcare—paying a premium and hoping the system works—to an active approach in which employers have greater visibility into their claims, more tools to help employees navigate care and more ability to manage risk. That is the promise of a healthcare captive.
Cannabis employers have spent years building businesses in an industry that did not always fit neatly into traditional financial, legal and insurance structures. As the industry matures, its employee-benefits strategies can mature with it. The next step is giving cannabis employers access to healthcare structures that recognize the realities of their businesses while providing employees with the comprehensive care they need.
That is not simply an insurance issue. It is a workforce issue—and increasingly, a business strategy issue.
Scott Byrne is president of Blackwell Captive Solutions, a medical stop-loss captive that helps brokers and employers bend the healthcare cost curve.
