Like a fine watch, the healthcare industry has many complicated moving parts:
- Third-party payor (you)
- Uneducated users (your employees)
- Your salesman (agent)
- Administration (TPA, or carrier)
- Insurance (carrier)
This system puts you as an employer at a significant disadvantage.
Third-party payor - As an employer, you are at the mercy of your agent's ability to deliver an affordable health insurance plan that your employees feel is still a benefit. However, your employees utilization of that insurance plan will result in a direct reflection of your cost to provide this benefit. Increase use, increase premium.
Uneducated users - your employees drive your cost. If left unchecked, over-utilization through excessive ER visits, unhealthy lifestyles, and general moral hazard will lead to significantly increased premium costs. Without robust employee education, your benefit plan may spiral out of control into:
- Unchecked utilization.
- Increase premium.
- Decrease benefit, Increase employee cost share.
Your agent - Speaking of premium increases. Did you know that your increase in premium is actually beneficial to your agent? Why would your agent find ways to reduce your premium if it results in a pay cut? Unless your agent is also compensated to manage risk, analyze utilization, and create solutions, you'll lose.
Administration - Your claims administration is handled by one of two parties. Your carrier (the insurance company), or you've hired a TPA to manage a first dollar level of risk, prior to insurance coverage from your carrier. Either way, they hold the knowledge of your group's utilization. That data is your single most valuable aspect of your benefit plan. Do you get this data from your carrier, your TPA? How can you design a benefit plan, if you don't know what your employees perceive as a benefit?
Insurance Carrier - With the indoctrination of the Affordable Care Act, carriers are now more motivated than ever to increase your premium. Why? For small groups, carriers are mandated to offer coverage without knowledge of prior employee utilization. Without that data, you're destined to pay more. For small and large groups alike, PPACA mandates that carriers must limit their profit as a % of claims. So, if you're group's claims increase, so can their profit, through premium hikes that you pay.