Funding Jobs Through Your Employee Benefits Plan
3 minute read time
All too often, “It is what it is” or “There isn’t much we can do” describes the attitude taken by advisors and employers alike towards rising healthcare costs. However, when the financial consequences of the controllable aspects of healthcare are viewed through the lens of their real-life implications for businesses and families, the need to properly manage them comes into focus.
What kind of real-life impact will be realized in 2022?
Funding for at least one job is lost for every Humira or specialty drug user.
Why? The average net specialty drug cost per user per year is more than $60,000.
A $500-$1,000 pay increase for the entire workforce may be lost due to health plans subsidizing large claims for other employers that may even be their competitors.
Why? Employers take on unnecessary risks due to adverse selection for members who may have access to more cost-effective coverage elsewhere.
An entire year’s worth of signing bonuses is lost for every member who makes a sub-optimal choice on where to have their surgery.
Why? The net cost of the best-performing facilities is significantly below the average cost facility.
Why are conversations on these topics rare in the context of health insurance costs/renewal meetings?
The focus of these efforts has traditionally been on obtaining lower-cost quotes and administrative fees. The shortcoming of this strategy is that while it may provide a cost reduction for the upcoming year, neither of these approaches will make a lasting impact on what drives $0.85 of every $1 spent on healthcare: the frequency and severity of claims.
As a result, it has not been clear to organizations how properly managing their insurance spending – through managing the frequency and severity of paid claims – can positively impact their overall workforce, attraction and retention strategies.
Thankfully, emerging innovations have given employers the power to pivot these challenges (among others) into a competitive advantage that benefits their bottom line, puts dollars back in employees’ pockets, and maximizes the quality of care. Moreover, these benefits are never realized at the expense of employee benefit levels or provider choice.
What is the ultimate result?
In the words of a local 325-employee manufacturer in Wisconsin, "We are actually saving jobs through our health plan."
How did they get there? Three stakeholders were incentivized to change.
- Motivated leadership. This is mandatory. If the C-Suite does not agree there is an opportunity for change, and that the opportunity is time-sensitive, the decision will continue to be pushed off year after year.
- An HR team that embraces learning and change. They are the team on the front lines educating and guiding employees. The biggest landmine that can derail the credibility and reputation of an innovative benefits plan is a poor member experience. HR is key to ensuring all members experience the full benefit of the program without confusion or worry.
- An advisor who can analyze, integrate, implement, and modify the appropriate solutions. Any advisor can rattle off a plethora of potential solutions. However, the best recommendation for any given employer depends on the administrators involved, geographic area, claims experience, specific stop-loss deductible, appetite for change, and employee culture. A misunderstanding of these factors can lead to a cumbersome implementation, poor member experience, and financial underperformance.
A dream team of these three stakeholders has the potential to be a catalyst for positive change for organizations and the people they serve. The challenge is known; the innovation is here. It is now incumbent on advisors and employers to take the first steps.