There is always opportunity in chaos.
That’s the overriding thought every time the government talks about solving health care.
For almost a decade, Washington has gone back and forth on health care, with 95 percent of activity completely political. Nothing has been done to solve the issues with health care.
So, what do companies do?
Start by understanding that Washington – either side of the aisle – is not resolving your health care challenges.
Although reform and progress will occur, it will not be in a time frame that will help companies overcome their existing health care costs.
Remember, all U.S.-based employers are on the same playing field. And with respect to health care, it’s a rainy and muddy mess.
This mess leaves two options: Pack up your team and go home. Or adapt, improvise and find the best umbrella.
Companies that adapt and implement the following best practices successfully outperform their competitors by 3 to 5 percent each year. Although that may not seem significant, with health insurance, that equates to more than $1 million in savings per 100 employees every five years.
< ENGAGE LIKE YOU MEAN IT
Owner, president, chief financial officer, controller, human resources director – no one enjoys dealing with rapid health care increases.
Be proactive. Start early. Engage in the process. Be in the room and demand more.
Employee benefits are a top-budget line item for employers, and they need to be treated like so.
What other top expenses are you reactively managing? Salaries? Rent? Supplies?
Take ownership by being engaged. Build a team of experts and you will win against your competitors.
< DEVELOP A FIVE-YEAR PLAN
Employers have multiyear plans for everything except health care. They’re experiencing a great year, only to be blindsided in November by insurance companies that deliver sports tickets and a double-digit increase that destroys budgets.
Push your experts to think outside the box. Micromanage every aspect of your health care spend.
Do you receive comprehensible data? Do you have a strategic wellness program that addresses employees’ needs and targets your highest spends?
Eighty percent of all health care costs are preventable, but do you have the tools to prevent them?
One in three companies will receive at least one 30 percent increase over a five-year period. Adequately protecting your company from risk will allow it to overcome an unfavorable claims year.
You should never hear about your yearly claims history for the first time in November. Do not settle for uninformed decision-making.
Set quarterly meetings with your experts and evaluate every dollar being spent. Health care does not need to be an unpredictable expense.
“You’re getting a 25 percent increase, but you’re lucky because everyone else is getting 40 percent. By the way, you have to make your final decisions in five days.”
Tired of this yearly dance? Take action. Demand more.
< MARKET LEADER VS. GUINEA PIG
There are numerous approaches to managing health care spend that you’re inundated with every day, especially this time of year. What has value and what is just noise?
All approaches must be assessed by requiring answers to these two vital questions:
Will this provide short-term savings or true protection from risk long term?
How will it affect my employees and their families?
Here are examples of what’s out there:
< Limited provider networks – Potential cost savings, but is it worth telling your employees they must change doctors or pay more?
< Self-funding – Employers with as few as 15 employees can self-fund, but doing so with fewer than 300 employees is not insurance – it’s gambling. Evaluate consortium options that offer greater protection from risk via protected stop loss.
< Carve out prescription drugs – Potential savings vs. potential member disruption.
< Insurance carriers vs. third-party administrators – Insurance carriers have better discounts with hospitals and doctors. TPAs more aggressively manage spending. Have your experts evaluate what’s best in your market.
< Reference-based pricing – Paying less than billed and litigating the difference with hospitals. Your employees may get caught in the middle.
< High-deductible health plans – When combined with health savings accounts, these plans will lower spending and, over time, change the behavior of employees, slowing the rise in cost. Employee education is essential, and these plans must work for all employees, not just the young and healthy. Also, additional programs are becoming available to save employees money when deductibles are triggered.
< Telemedicine – You probably have telemedicine through your insurance company and do not know it because no one uses it. When employees understand the benefit and it is set up correctly, telemedicine has a tangible return on investment.
As noted, these steps are worth $1 million per 100 employees every five years if done correctly.
Do you have a team of true experts or do you have “Expensive FedEx,” an agent who takes the insurance carrier’s word, stamps its logo on the top and adds 5 percent?
You have options for 2018. It’s not too late.
Tony DaRe is agency principal of BSI Corporate Benefits in Bethlehem and Detroit, which was named the fastest growing employee benefits consulting firm in the Greater Lehigh Valley for three consecutive years. It represents companies in 38 states and internationally. He can be reached at [email protected] or 484-821-1300, ext. 201.
