When I got into the insurance business, one of the first things my boss did was give me a math quiz. Having tackled algebra, geometry, and calculus back in my formative years I was not frightened by the test I was about to receive. He went to the white-board and wrote down the following equation:
P x U = $
“OK, OK, I can do this,” I thought to myself. Divide both sides of the equation by P and solve for U and I will have my answer. That left me with
U = $ / P.
Easier said than done. Being in sales, I don’t give up easy, but after a couple guesses I realized I needed a hint or better yet, the answer.
He said “Price times Utilization equals Premium”. Trying to impress him with my keen understanding of insurance lingo, I slowly nodded my head and said “Yep, got it” and thought to myself, don’t ask questions…just back out of the room slowly. Before I could get away, he said one more thing, “To reduce Premium, you have to improve Price or Utilization!” and then he laughed a sinister laugh (OK, I added that part for effect!)
Much has changed in the business world in the last couple years, but the truth in that formula still is etched in my mind.
Rich health benefits, once a key tool for attracting the best and brightest, have threatened to pull many companies down and forced business owners to make changes in their benefits and shop their insurance carriers to impact the price component to the equation in order to limit the increase in their healthcare premium. Business owners are at their wits end because they’ve increased deductibles, shopped carriers, and reduced employee benefits and still their premiums go up.
The tougher part of the equation to change is the “U” in utilization. It is in addressing this variable of the equation that non-traditional insurance advisors earn their stripes.
HNI takes the non-traditional approach and changes the insurance game by introducing a health care model that allows employers to accomplish two objectives critical to their success – controlling the growth of health care costs and creating a world-class organization with fully engaged employees.
One of the many non-traditional ideas that HNI brings to the table is a health enrichment program that incentivizes employees to contain health care costs minimizing the “use-it-or-lose-it” risk inherent in flexible-spending accounts and motivates employees to consider how they utilize healthcare in order to spend their healthcare dollars wisely so that both the employee and the employer succeed.
The goal of HNI’s work with our clients is to engage every employee in the company, even if they don’t use the company’s health plan. The company funds a debit card with a set amount that the employee can use to purchase prescription drugs, over-the-counter medications and other items not covered by the health plan. Employees can also fund the debit card with flexible spending account contributions. The card automatically depletes the flexible spending contributions first, since that money cannot be rolled over from year to year.
While the debit card has tax advantages similar to health savings accounts, health reimbursement arrangements and flexible-spending accounts, it is much more flexible. It does not require that the company offer a qualified high-deductible plan or any health insurance at all.
Because they own the debit card, employees have a financial incentive to spend the money wisely. Most importantly, this model strengthens the employer-employee bond and moves business owners away from an approach simply focused on cost-shifting to true employee engagement to get everyone on-board in changing the “U” in the insurance equation.