Do you think your healthcare costs are too high? Most employers would say yes. Do you think you’re your costs are going to go down? Most employers would say no. How many more increases can you continue to take, and at what rate? Are you familiar with the Rule Of 72?
Healthcare costs are unsustainable if increases occur at present rates. Businesses cannot continue to absorb 8%, 10%, or 12% increases or more, and still provide a valued benefit to employees. If you’re serious about reducing your healthcare costs – without changing benefits to employees, how are you going about to do it?
Traditional methods have been either “transactional” or those that involve Cost Shifting. “Transactional brokers” will recommend that you change insurance companies, TPAs, networks, stop loss, etc. every few years, and are focused on merely the price of the program – “where can I find a lower premium (price)?” There are all sorts of issues that come along with transactional change, but the main problem with this method is that they don’t get to the root cause of why claim costs are going up. They simply focus on who can provide the administration at a lower price, or the initial premium at a lower price, but they don’t focus on affecting the ultimate source of the problem – your claim costs. The insurance industry is notorious for “buying business” in the first year – based on price – not cost.
The other method is one which is which takes into account cost shifting. Cost shifting has occurred as long as I can remember, but involves raising your employee’s deductibles, co-pays, out-of-pocket limits, and/or their contributions from their paycheck to help lower costs. While it may affect the bottom line – it doesn’t affect the top line – claims.
The problem with this approach is that employee goodwill is totally sacrificed. In addition, with High Deductible Health Plans being so popular, employees have consistently expressed angst in numerous surveys about their ability to afford healthcare when they actually need it. The obvious effect will be downstream – whereby employees will avoid the cost of care because they can’t afford it. They also have expressed angst of affording the cost of healthcare out of their paycheck for their monthly contributions. With healthcare costs going up so dramatically from year to year, employee’s pay raises from year to year cannot keep up (between 0% and 3%).
If you are serious about lowering your healthcare costs, how are you going to do it? Are you going to continue to be transactional and/or cost shift to employees, or you are you going to try to get to the root cause of your increasing cost?
This involves doing a deep dive into your plan and examine contracts, programs, and very specific claims data to find where the problem lies, what improvements/changes can be made, and what compelling cost reductions can be accomplished – without changing benefits to employees. It’s not an easy task, but a necessary one – and very achievable!
If you would like to have your plan analyzed, or would like to discuss what the analysis entails with a complimentary call, please let me know at www.strategichpc.com Scroll down to the bottom of the page!
Sometimes you don’t know what you don’t know.