There are opportunities to “take a peek under the hood” and see what’s driving your company’s healthcare. Technology solutions exist which provide accurate Medical and Rx claims data for fully insured carriers. Better optics makes for better decisions. Transparency is critical, as you can’t manage what you can’t measure.
Most health insurance brokers are getting paid for activity not outcomes. There is a movement in the industry in which consultants are so confident in their ability to deliver quantifiable and measurable savings, they’re putting their compensation at risk. Some put all of their compensation at risk, others put some of their compensation at risk. It makes sense to have aligned interests, as this is an industry plagued with misaligned interests.
The four primary drivers of healthcare costs are Inpatient Hospital (30%), Prescription Drugs (27%), Physician Visits (20%), and Outpatient Surgery (20%). Top benefit consultants have solutions that help employers and employees address each of these cost drivers. There are highly effective risk management strategies to incentivize employees to be great consumers of health care, and when their care costs can be free or near free. These strategies are a win/win for the employee and the health plan.
Does your health insurance broker discuss how they’re paid? Many insurance carriers pay brokers a percentage of the premium (typically 3% to 5% of the premium). As health insurance premium increase, the broker gets paid more, so there’s no financial incentive to introduce alternative health plans as there’s a financial conflict of interest. Furthermore, many agencies receive substantial insurance carrier persistency bonuses so there’s a huge financial incentive to keep employers in health plans that may not serve their best interests. Remember, brokers work for whoever signs their paycheck. In many cases, it’s the insurance carrier.
If your broker is simply shopping fully insured carriers and negotiating a “less bad” renewal, it’s time to look for another broker as you’re likely grossly overspending. Your broker needs to have effective leverage in order to negotiate with health insurance carriers.
There are self-funded health plans that are “bundled” which means employers have no choices or flexibility. There are also self-funded health plans that are “unbundled” which gives employers the opportunity to select vendors that are best in class. Employers are typically much better served with an unbundled health plan.
There is very little price transparency in the healthcare industry. We have seen the cost of an MRI range from $500 to $5000 with the same equipment, same test, and different providers. There is a huge disparity in cost between facilities, hospitals, and diagnostic centers. Top consultants are making available highly effective solutions to incentive employees to be great consumers of healthcare. When employees choose the best doctors, facilities, and/or hospitals, care can be free. This is a win/win for the employee and the employer sponsored health plan.
The cost of insuring an employee’s dependents is very expensive, often significantly more expensive that insuring the employee. There are numerous solutions to motivate dependents to participate on other health plans. These risk transfer strategies can be designed to be an incentive and/or to be penal.
