We think it’s critical in benefits consulting for us to create a common foundation with our clients to drive benefits decisions. There are enough shiny objects in the industry to sideline a conversation and take attention in any one of a dozen different directions. To create meaningful benefits plans that deliver great care to members and don’t cost a fortune, we have to establish common goals and principles.
What should you expect from your health plan?
We think that groups should expect certain things from their health plan:
- Quality care
- Adequate access to providers and facilities
- Understandable benefits / minimal complexity
- Member support
- Data and transparency
- Reasonable costs
Health plans should deliver quality care, at accessible facilities and to accessible providers, with plan designs that are simple enough for members to understand and with support so members can get their questions answered and make sense of their plan and care.
As the plan sponsor, we believe employers should expect data and a level of transparency so they can understand their plan spending and member outcomes. As the payer, an employer is able to control what happens with the plan and bring different solutions to members as needed.
How Do Fully Insured Plans Fare?
The majority of small businesses use fully insured medical insurance plans to deliver healthcare to their employees.
In this model, the carrier is the payer, the administrator, the insurance, the pharmacy benefit manager (PBM), and any other number of roles as they relate to employee healthcare.
For small groups, this model is cost-effective for administrative purposes and spreads out the financial risk of any employee having a significant claim.
But as groups increase in size and write larger and larger checks each year to their insurance carrier, they start to ask more questions of their health plan.
Where are our dollars going?
Can we bring another point solution to members?
Which members are driving our costs, and how can we better help them?
What inefficiencies and waste is driving cost in our plan?
These questions and more lead employers and their advisors to consider alternative funding strategies.
These live in the land of self-funded health plans, which come in many different colors.
Do Self Funded Health Plans Deliver?
A self-funded health plan means an employer and their consultant leave a traditional insurance carrier and pay member claims directly, through the use of vendors such as a Third-Party Administrator (TPA), a Pharmacy Benefit Manager (PBM), and various point solutions to deliver access and quality care to members.
To manage the risk of large claims for any one employee or for the plan overall, we use Stop-Loss Insurance and Captive Insurance in some cases to manage variable costs for a group to within reason given their unique circumstances.
While self-funding does avoid certain premium and carrier taxes, it does not in and of itself improve a benefits plan or better manage costs.
A group that moves to self-funding its health plan can realize benefits by configuring its own point solutions such as mental health providers or disease management providers, and by analyzing claims data and utilization to identify high-cost care that can be replaced with lower cost, and in some cases, better care.
While this may sound like a lot of work for the typical group with a few hundred members, I have great news: this is what we are here for!
Our Role in Helping Groups Design Health Plans
Our consultant’s job is to help plan sponsors identify the goals they want to achieve with their health plan and benefits, then identify the best way to create those outcomes. For small groups, that may mean using fully insured medical insurance from national carriers.
For other groups with a desire to do more, we can look to alternative funding strategies such as Self-Funding to create tailored and lower cost plans.
Given the 2021 Milliman Medical Index estimated the annual healthcare costs for a typical household of four to be $28,256, we have to ask how we can move the needle for American families.
Since employers are the payers for over 140 million American’s healthcare, we believe we are well-positioned to reduce the cost of quality healthcare for the average American.