Most leaders feel like they don't have control of their health care costs. Annual rate increases erode their profits and the renewal process becomes a miserable experience for their team.
This is the employee benefits experience for most mid-size American companies. But it doesn’t have to be this way.
Employer-Focused Components
It’s hard to believe that 30% of your spend gets wasted, but it's true. So where does that wasted money go? Here are a couple areas:
Erroneous charges: Erroneous charges happen more often than you’d care to believe. And they’re really hard to catch because your employees are the only ones that know what services they received. Some companies are offering employees 20% of the savings for any erroneous billings that they find.
Wild cost variations: If a steak dinner costs $50 at a great restaurant, and $500 at an equally great restaurant that is located right across the street, the decision about where to eat probably wouldn’t be too hard to make. Even if you had to make a couple extra turns to get there, it’s still probably worth it to avoid paying 10X more for the same thing.
Strangely enough, though, when it comes to health care this basic sense of rationality seems to vanish. Part of the problem is the lack of pricing and quality transparency, but part of it is a conscious choice to make a good decision in a stressful situation. The cost of an MRI, for example could cost 10X more depending on where you choose to have it done. Some companies are incentivizing employees to make the right decisions.
When it comes to implementing cost containment strategies, it's important to be confident that what you are doing fits within the law. Our clients have access to employment law attorneys to ensure that this is never in doubt.
How you finance your benefits is a big decision. Not only are there financial implications, but it will also drive the strategies that you are able to put in place to control costs and deliver a better experience for your employees. Some options provide a community of like-minded employers that share ideas and risk, while others allow you to go on your own.
Scroll down for more details on each of the 3 financing options (fully insured, self-funded with a captive, and self-funded).
Employee-Focused Components
Leading companies are overspending on primary care to ensure that they catch illnesses early. This usually includes biometric screenings and using incentives to change behaviors.
These companies are also putting extra effort into managing long-term chronic diseases such as diabetes, cancer, and COPD.
The health care system can be especially difficult to navigate. Most people don't understand what they have access to, how everything fits together, and how their choices drive costs.
It's not your employees' fault, though. The system was built on a lack of transparency in both pricing and quality. HR departments are now tasked with the responsibility of education and providing the tools required to fix this problem.
It will come as no surprise that most people don’t understand their health care benefits. Study after study confirms this.
And this problem is even worse when it comes to millennials, half of whom find their open enrollment process extremely confusing. Leading companies are amping up their communications by creating fun annual themes and using a variety of different communication channels to get the message across.
