Reduce The Costs of Health Plans

From the desk of Jim Farley:

Jim Farley
Jim Farley, President

I have been listening to several podcasts and reading several blogs about ideas and products being created to reduce the costs of health plans. There is a common theme that is being repeated over and over and over. That is, whatever is being proposed is necessary as it is being proposed because employees, employers, and physicians are not capable of understanding the cost or quality of health care. It’s just too complicated.

It is not coincidental that the entities making this statement are either hospital systems or private equity funded enterprises looking for a bigger piece of the $3 trillion health care economy. They like complicated, expensive solutions that enable generous profit margins.

Last Friday I met with a small contracting firm and its owner whose background is a skilled tradesman. He intuitively understood that an employee benefit plan is a cooperative with costs being determined by expenditures. He wanted to know how to decrease unnecessary or wasteful expenditures so both the company and its employees would be able to pay less.

We discussed the idea of using a plan with a high deductible, providing employees with a quality/cost shopping tool, and reimbursing portions of the deductible for using a high quality/low-cost providers of services of labs, any form of imaging, or any services of a hospital. He felt that it would be very reasonable to require employees spending more than $500 on a service to either uses a website or make a phone call in to determine the quality and cost in advance of utilizing them. When facing a high deductible offset by a reward for rational consumer behavior participants would certainly have the motivation to be engaged.

As I listen or read the various experts on reducing the cost of healthcare such as HR professionals, consultants, insurers, or hospitals it sounds like very complicated. When I hear it boiled down to its essence, it really is not. When all involved understand that goal is to reduce the cost of one of the most expensive items in a business or personal budget by eliminating waste and excess, almost all people get adapt pretty quickly.

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