A new model?

A Milwaukee entrepreneur who created a successful software retail company recently started another company that aims to help small and medium-sized businesses create health benefit plans that dramatically reduce their insurance costs.

The new company, Newton Health, has engaged in an aggressive marketing campaign, boldly advertising, “How to take up to 50 percent off your health insurance costs right now.”

The owner and founder of Newton Health is Anthony Boldin, 36, who is also the owner and founder of Atomicpark.com, a software retail company located at 757 N. Broadway, Milwaukee; and of Voting Technologies International, a Waukesha-based developer of high-tech voting systems.

Atomicpark.com, which was launched in 1998, had revenues of about $40 million last year, is a three-time Metropolitan Milwaukee Association of Commerce (MMAC) Future 50 company and now has more than 30 employees. Voting Technologies was launched in 2001 and has fewer than 10 employees.

As a small-business owner, Boldin says he became frustrated with the ever-rising costs of health insurance, which is a particularly troublesome problem for businesses in the Milwaukee area, where health care is more expensive than in most similar-sized U.S. metro areas.

“Health care costs are a very big drain on the bottom line,” Boldin said. “I wanted to find a better way.”

After about five years of development, Boldin recently launched Newton Health, which is designed to help small and medium-sized businesses create customized health insurance plans that are self-funded.

For a Newton Health plan, the premiums paid by businesses (Newton Health calls them “contributions”) go into an account. The money in the account is used to pay claims for health care for the company’s employees and for administrative costs for the health insurance plan. Any unused money in the company’s account stays there and is rolled over into the next year.

“We are not an insurance company,” Boldin said. “We are engaged in customizing and designing health plans for companies. We implement the plans on the administrative side and provide wellness services. We tailor the health plan for that particular company based on their needs, desires and budget. It is more analogous to self-funding than it is to traditional insurance. It really has all of the flexibility of self-funding but not the risks because of the different options that are provided. This used to be the realm of the big companies only. But now we’re bringing this closer to small and medium-sized businesses so they can also reap these rewards.”

However, some in the insurance industry are skeptical that Newton Health provides a wise health insurance option for businesses. Those skeptics say Newton Health’s promises are probably too good to be true.

“I’m in the let’s see it and let’s prove it mode,” said James Mueller, president of Frank F. Haack & Associates (an HRH Company), a Wauwatosa-based insurance brokerage.

 “If somebody on the street offered me a Rolex for $20, that doesn’t mean I’d go for it,” said Jon Rauser, president of Milwaukee-based The Rauser Agency Inc., an insurance brokerage, and president of the Wisconsin Association of Health Care Underwriters.

Rauser said the Newton Health plan does not appear to provide the essential protection that traditional insurance provides.

“It sounds like it’s a self-funded product with no insurance protection at all,” said Rauser. “Why would a business owner buy thatω If my clients ask me what I thought I’d say, I wouldn’t touch it with a 10-foot pole. There doesn’t appear to be any protection at all.”

Boldin knows his concept will be met with some skepticism in the market at the outset. He said Newton Health customers have the option of purchasing stop loss insurance to protect against the possibility that its claims will exceed the funds it has paid into its Newton Health savings account. Adding the cost of stop loss insurance reduces the cost savings from a Newton Health plan, but customers will still save, compared with traditional health insurance, he said.

Newton Health does not sell the stop loss insurance.

“We have providers that they can buy that through,” Boldin said.

So far, Newton Health’s only clients are Boldin’s other companies, Atomicpark.com and Voting Technologies International. Boldin said the Newton Health approach has resulted in significant savings for those companies this year. Atomicpark reduced its health insurance costs by 10 percent, as opposed to the 20 percent increase it would have paid for renewing its previous plan, and Voting Technologies had a 15 percent savings this year, Boldin said.

Boldin predicts those savings will grow, and Atomicpark will have reduced its health insurance costs 50 percent by next year and Voting Technologies will reach 50 percent savings in three to five years.

An important component of the Newton Health approach is wellness programs, Boldin said. Employees receive incentives for participating in a wellness program, and they can get additional incentives for reaching goals in improving their health, he said.

“The biggest way to save money on health insurance is not to use it,” Boldin said.

Newton Health provides all employees of its clients with a personal health coach, who provides one-on-one guidance for the wellness program.   

“Some larger companies do health risk assessments and assign coaches to those who have a high risk of getting ill,” Boldin said. “But that isn’t nearly enough. Why only provide assistance to those who are just inches away from a catastrophic claimω We are providing personal health coaches to prevent everyone from needing interventions.”

Another key to saving money on health insurance costs, Boldin said, is that the Newton Health plans allow businesses to roll over their unused premiums to the next year.

“If you have claims that are less than the money put into it, which is fairly typical, then that money is still yours,” Boldin said. “Insurance companies, when they have the money and you have hardly any claims, do they give you the money backω No. We’ve talked to companies that haven’t had any claims at all (in a year) and then their premiums went up 20 percent. It doesn’t seem fair. With the Newton Health plan, the money stays with you.”

Also, under Newton Health’s tailored plan design, savings are achieved by limiting what will be covered.

“Our plans are federally regulated, not state regulated,” Boldin said. “Therefore, we have complete control in the customization and personalization of our plans for our clients’ companies. You can cover what you want, and not cover what you don’t want. Cover what is important to you. Don’t cover what is not important to you. Or, don’t cover what you can’t afford.

“By making plan design choices, you can whittle out the cost for these items. It can be items that lobbying groups have probably spent millions to put in, such as chiropractic or home nursing care or hair transplant services. Or, they can be more personally controlled items, such as ‘extreme sports’ ‘injury due to alcohol’ or ‘injury due to at fault accidents,’” Boldin said. “These are things that the individual has complete control over. If they drive carelessly, or they get drunk and get hurt, well then should the company pay for your bad choicesω There is a whole checklist of items that we go over with the client, that they can choose to cover or not.”

That ala carte approach of insurance is legal, but unusual, Rauser said.

“If you’re self-funded you can do that,” he said.

Many businesses would not be willing to limit their coverage because they would not want to be perceived as cruel if they deny coverage for an employee who is seriously injured, Mueller said.

“It all sounds good in theory, but how many employers are going to buy into thisω” Mueller said. “Eliminating coverage might sound good, but they are very difficult to work with in the workplace. Things that sound good in theory don’t always work in the real world.”

Despite the skeptics, Boldin said he has big dreams that the Newton Health approach could revolutionize the health insurance market in the country.

“We have patents pending on a few components of our plan,” Boldin said. “I certainly have a vision for Newton Health to be one of the biggest players in the health care industry in the United States. I believe it can be.”

Owner: Anthony Boldin

Address: 757 N. Broadway, Milwaukee

Web site: www.newtonhealth.com