How Do You Achieve Real Savings for Your Health Plan?
Financial advisors often tell people that it is important that they not spend more than they earn. No matter what kind of discounts or price cuts a person gets on the items they buy, what is most important is the big picture: not sending out more money than they have in their coffers. After all, what good does it do to point to the discount you were offered if you have spent more than you really needed to spend?
In some ways, this same idea applies to a company’s group employee benefits. When you are shopping for a health plan make sure that you ask the right questions before you renew. While conventional wisdom continues to focus on the discount as the biggest determinant of cost, additional analysis indicates that discounts do not really indicate how much you are paying overall.
Insurance carriers or administrators might tell you that their big discounts will help your health plan save in the end because you have to pay less, but these claims do not examine volume nor the original price of the service. Paying a discounted price for a high number of claims or a more expensive claim can still be costly. An insurance carrier may be willing to extend you all types of discounts, but in the end what really matters is the number of paid medical claims per member per month. When you do not know this number, you tend to be dazzled by marketing promises of a big discount or other factors that do not directly correlate to helping you control costs.
Which is more important to your health plan, the amount of the discount or the total cost of the plan? If you have answered the later make sure you attend Jim Farley’s presentation, Serious Cost Containment Without Cost Shifting: Managing Costs by Managing Details, at the NOHRC 2012 conference. Jim’s educational and forward thinking session is designed to help employers continue to maintain a balanced approach to employee benefits, allowing them continue to provide competitive benefits for helping to attract and retain a strong, healthy workforce even as health care reform continues to change the landscape of employee benefits.