There are several reasons for this, but chief among them is cost as all employers are very aware of the fact that providing healthcare to their employees comes with a high financial burden – to the tune of it being their second or third highest line-item cost.
And to make matters worse, every year it goes up by double-digits without any explanation as to why. This opacity of claims and cost turns into a frustrating mystery for employers as they have no idea as to why it is happening and how their bottom line might be affected.
The reason for the mystery and accompanying frustration stems from the fact that most employers are fully insured or quasi self-insured which means they have minimal access to meaningful information.
In fact, if their increase is only 9% it is met with a sense of surprise and numbness – like “why is it only 9% this year?”
Unfortunately, most employers don’t have the margin to account for these annual increases which leaves them with limited options to address them.
They are often faced with asking themselves questions such as, “Do I make the plan design worse for my employees?”, “Do I shift costs to them?”, “How do I handle this?”, and “What levers can I pull?”
None of the answers to those questions is ideal and it boils down to employers either shifting costs to their employees through out-of-pocket expenses or higher deductibles, or electing to provide a plan that is worse.
According to Bruce Clarke, Co-CEO of Catapult (formerly CAI), a non-profit membership organization supporting more than 1,300 local employers across North Carolina, employers made a big mistake a few decades ago when they let third parties develop PPO networks.
“Employers don’t own those networks, and if you don’t own the networks and you’re not in the relationship with a provider, then you get what we have gotten, which is out of control costs and prices. And a lot of employers are coming back around to the question of how can we get back to that decision point and get some control over this process?”
According to Clarke, in order to have a meaningful impact, it is time to focus on group health.
“We need to expand options and have a significant impact on the value of the healthcare that our employers purchase and make it affordable for our employees to get the care they need and deserve.”
To make that happen, employers need to become self-insured. And what’s true is that being self-insured isn’t as scary as it used to be back in the day.
In fact, becoming self-insured can be done as a bridge between fully-insured and large company self-insured. It is a way for employers to make positive changes so that they are able to protect the value of healthcare for their employees.
There are a few positive changes for employers as they become self-insured:
What is also interesting is that employers who become self-insured also find some surprises along the way…
So, in the end, it is a breath of fresh air as everyone wins. In fact, it’s a win-win-win!
As Clarke says,
“North Carolinians deserve better health outcomes and better incomes. And that’s why we are promoting Hero Health Plans to our members.”