I hate to say this but unfortunately, the health insurance business is one which is over promised and under delivered. How often have you heard from insurance companies or brokers that they can do remarkable things to lower your healthcare costs, but at the end of the day the costs keep going up and/or there is employee dissatisfaction of some sort.
I’ve been in this business longer than I care to admit, and over the years I’ve heard all the wonderful things that insurance companies have to offer – how they can reduce costs, technology, networks, discounts, etc. All of their talk is a mile wide and an inch deep.
Obamacare placed a limit on the percentage of premium that an insurance company can charge. This effectively took the insurance company out of the game for employers to reduce healthcare costs. Think about it, if an insurance company can keep only 20% of the premiums charged, how do they make more money? The answer is the insurance companies want the premiums to continue to go up from $1.00 of premium to $1.50 to $2.00, and while their percentage is still the same they make more money. All’s you have to do is look at their stock prices.
They all talk a good game but at the end of the day not much has changed. They continue to state that they negotiate “competitive” discounts with medical providers, but at the end of the day if medical providers continue to raise their prices the negotiated discounts are watered down and meaningless.
What’s needed and actually exists today is a turnkey operation that can control the cost of prices for medical providers and pass the savings on to an employer and their employees. The results can be very meaningful:
- Improved and more affordable benefits for employees
- Attract and retain employees
- Provide meaningful wage increases
- Invest in capital improvements and expansion
- Greater profitability
Employers spend a significant amount of money on employee benefits – usually the second or third highest expense on their P&L. If that’s the case, then why do employers continue to drink the Kool-Aid of insurance companies and all of the “wonderful” things that they can provide? The reason is usually that there is a comfort level and trust with their broker or consultant. However, the current compensation arrangement between a broker (who gets paid by the insurance company to sell their programs) and the employer is misaligned. Employers don’t pay other vendors in that way. They pay them directly. So why is the broker is getting paid by an insurance company to sell their product to an employer? Hmmmm… Sounds like a broker might choose to sell an insurance companies program that pays the highest commission!
Employers need to align their interests with their broker or consultant – not the insurance companies interest. In fact, why not incentivize the broker or even the HR department to implement the best programs that will produce the best results. If costs are lower, then the broker and/or HR department gets rewarded.
Believe it or not, there are health insurance programs that can do all these things – it’s just not utilizing an insurance company. I would refer to these companies as “an inch wide and a mile deep.” All of my clients would attest to these programs. If you would like to learn more about these programs, give me a call at 970–349–7707, or email me at [email protected].
