timberland oxford shoes Employers need to stop rolling over and playing dead when it comes to health plan cost hikes
What if I told you your payroll costs were going up by 7% this year and your cost of goods sold were up 8%? And what if you then found out that your peers were seeing significantly lower increases, thereby shifting competitive advantage in their favor? What would you do?
I’m fairly certain most businesses would be up in arms and immediately deploy their best and brightest to figure out what the problem was and how to fix it. Fortunately, you’re probably not facing those cost increases, but you are facing another one that’s equally, if not more, damaging rising health care plan costs. It doesn’t have to be that way.
Every year this health insurance beast comes a knocking. Each year the creature becomes bigger and uglier than the year before. It’s an enormous job to fight this thing. You hate it but don’t believe that you can beat it. I’m here to tell you that you can.
Is the beast going away? Maybe shrinking? Recently there have been some reports indicating that the health insurance market is stable. But is that an accurate assessment of what’s happening in the market or more a sign of complacency on the part of employers who, over time, have learned to adapt to price increases by either cutting benefits or passing along more costs to employees?
There is a smarter alternative if employers demand better results.
Let’s start with some facts.
Fact one: The benefits industry is very healthy, margins are great and revenues keep moving up. This includes the financial position of insurance companies and brokers. Fact two: You are likely seeing cost control options that are built to perpetuate the current system. Sure, you may on occasion be shown alternatives, but they’re positioned as risky or unproven. Fact three: Your current benefits management approach will not improve these deplorable results.
For most companies, health care is the second or third largest expense. Yet, most companies are stuck looking at the same tired solutions year in and year out. Lean has become the new buzzword in just about every other area of operations with consultants brought in to identify ways to enhance efficiency, but when it comes to managing employee benefits plans, cost increases are treated as if they’re a standard part of doing business.
How do you change this paradigm and effect meaningful change at your organization?
It starts with believing that something better can be achieved and devoting more resources to manage this spend. You must deploy a diverse set of skills to attack the beast. You can’t control this kind of spend with paper clips and rubber bands.
Next, require that your broker disclose any incentives that may be paid cash or otherwise from any and all vendors, pharmacy benefit managers (PBMs) and insurance providers.
Recently Risk International partnered with the Health Rosetta Institute (HRI), a nonprofit created to accelerate the adoption of simple, practical, nonpartisan fixes to the health care system, to create the HRI Benefits Advisor Compensation Disclosure Form.
Ask your broker to complete the agreement to increase transparency and help limit potential conflicts of interest. Incentives influence vendor decisions much more than you think. Bottom line, you must demand transparency in all of your vendor relationships.
Then, be flexible in your approach to doing things differently. You must, because your employees can’t handle another cost shift, a shift that is silently killing their disposable income.
You’re not required to keep using the same vendors or negotiating the same way. Remember, insanity is defined as doing the same thing and expecting different results. PPO networks are fool’s gold. Hyped by big discounts, what they really do is mask the cost of health care while creating a service they want you to see as indispensable.
There are many exciting options now available. Your Rx program and contract is a whole story by itself. Other industry leading tips can be found in a new book by Health Rosetta’s David Chase entitled “CEO’s Guide to Restoring the American Dream: How to deliver world class health care to your employees at half the cost.”
So don’t wait for Washington to fix our broken health care system and bring your costs down. Politicians will still be debating a new model under the next Administration. You can make a change and achieve meaningful results today. It’s not a grandiose idea; many employers just like you have already shaken up an antiquated system and are realizing substantial savings, without compromising quality, just by saying “enough is enough” and doing something about it.
The result will be lower health plan costs and the ability to avoid cutting even deeper into employee paychecks, leading to a healthier bottom line and healthier, happier employees.
Eric Krieg is the president of Risk International Benefits Advisors, which operates completely independent from the insurance industry to objectively help companies optimize their employee benefits plans, reducing overall costs for the companies and their employees.