For employers offering health benefits to employees, the last 2 decades have been anything but understandable. In that time the price of Hospital Services has increased over 200% while Medical Care(non-hospital) services have increased nearly 120%. In comparison, wages have increased just over 80% and overall inflation increased just under 55%. And as most employers know, average health insurance premiums for a family have gone from $5,000 to $20,000 annually during that same period.
The Medical Industrial Complex has grown to be our country’s largest employer. In 1990 there were 11 Million jobs in the U.S. health care industry. It was the predominant industry only in New York and Minnesota. By 2020 the employment number increased to 21 Million jobs and is the predominant industry in all but 3 U.S. States. The market power and political influence of the industry has grown to overwhelming and impossible odds for the average business owner to have any impact on price or quality under the current status quo system. And it’s the employers who provide employer-sponsored health care who bear the largest burden for the uncontrolled explosion in health care costs. Seemingly never-ending premium increases paralyze your ability to manage strategic issues like the need to increase employee wages, invest in new technology, grow and expand your business, and stay competitive.
But, for those employers – of any size – willing to dare to see the problem differently there is hope. They can actually transform their employee health plan from an economic burden into an integral component of their business success plan. And in doing so, reduce their health plan spend and enhance the benefits offered to employees – at the same time. Although, it means that an employer must see that they have a “business” problem, not an “insurance” problem. You can’t solve a business problem with an insurance solution. It requires a strategic approach to integrate your health plan into your business objectives. Trading one status quo health insurance plan for another in order to reduce the annual rate increase (that probably wasn’t deserved in the first place) is not a strategic solution and will not solve the business problem. The following year will produce yet another rate increase because traditional health plans don’t allow for employer input for cost and quality decisions. It’s the insurance carrier who makes all those decisions, and that’s what continually drives premiums up. You can take control of your health plan expense if you’re willing to see things differently. The first step is to manage your health plan using the same Supply Chain Management principles used to control the cost and quality of other large purchases you make for your business. It’s an innovative concept not readily seen in the benefits marketplace because it’s not status quo – it involves more than just comparing traditional insurance plans and choosing the one with the smallest premium increase. But it is completely plausible and very effective. After all, you make other important buying decisions based on those same business management principles for supplies and equipment that are much less costly than your health plan, and they work. The approach produces results because it’s strategic, not just transactional. It takes more than just choosing a different carrier or changing an existing policy to try to solve the problem.
If you offer employer-sponsored health care, you have yet another looming challenge. The Consolidated Appropriations Act of 2021 (CAA)amends the Retirement Income Security Act of 1974 (ERISA) and imposes a series of new and complex obligations on health plan fiduciaries that mirror the rules that govern retirement plans. If you offer a group health plan ERISA makes you a fiduciary. It doesn’t matter whether you’re fully insured or self-funded. Your fiduciary obligations are the same and cannot be passed on to a third party. Among other things, ERISA fiduciary duty includes the duty of prudence. That involves the duty to prudently protect your employees and their families’ health and welfare when receiving medical care paid for by the health plan that you sponsor. Employers have an ERISA obligation to provide the safest medical care at the best price available. ERISA will require employers to obtain and understand information from their health insurers and their healthcare administrative providers that those parties may be unwilling to provide. So how does an employer comply with the fiduciary duty to ensure that plan members are receiving the safest, highest quality care available? How does an employer ensure that he’s protecting the plan’s financial assets when the status quo health carriers will not supply price transparency for claims and other administrative services?
These are the business problems we solve. We use our 40 years of executive-level experience inside the health insurance carrier field and our 40 years of C-Suite experience inside the hospital / clinical / health system environment to provide insights that help employers avoid the pitfalls within the traditional employee health system. Our unparalleled partnership offers an unprecedented view of both how health care is delivered and how it is paid for. We bring solutions that guarantee lower health plan expenses and enhanced benefits that protect your employees from financially crippling out-of-pocket expenses. This approach is a long-term strategy, typically in 3 – 5 years increments that reduces health plan costs up to 33% while reestablishing your health plan as a competitive advantage instead of a financial burden. And there is no need to wait to explore these principles until your next renewal, because by then it may be too late to avoid the next renewal increase. Now is the time to discover how to fix the problem.