Insurance, especially employee healthcare insurance is expensive. It’s natural and smart to want to save money. But, chasing short-term savings doesn’t always (or even usually!) mean lower long-term costs.
When implementing your healthcare plan for the year it’s common to consider plan changes such as deductible, co-pays, or co-insurance clauses. Or to consider your cost-sharing model and payroll deductions with your employees. These changes are typically done to mitigate an increase in healthcare costs at the suggestion of the carrier or broker. While this is common in most organizations, falling into the status quo of only thinking tactically can have long-term negative implications.
Understandably, changes may need to be made at times and may be the simplest way to deal with a problem you’re facing. Changing your plan design or cost-sharing arrangement may help to mitigate a cost increase but it doesn’t influence the direction you are going with your long-term healthcare spend. These are tactical changes that may bring temporary relief, but they don’t change your overall strategy and will likely leave you with the same problems year after year.
I’d like to recommend a different approach to planning and decision making for your healthcare offering.
Try being strategic rather than tactical.
Start thinking about your healthcare plan 60 days after you’ve renewed for the year. While most people are glad to put the chaos behind them as soon as the dust settles, this is an opportune time for you. It will prepare you for a better experience at your next renewal and beyond. The “offseason” is the best time to think strategically. There is no pressure to make a decision or solve a crisis. Stepping away from day-to-day issues lends itself to clearer, more strategic thought.
Think about the strategy you’ve been deploying to deal with your healthcare costs.
Do some homework on what the actual healthcare costs of your group are rather than focusing on the insurance premium. Consider how you are choosing to fund your healthcare risk. Educate yourself about the alternative strategies in the marketplace that may be more effective long term—like self-funding, captive alternatives, direct contracts, and cost-containment programs. Ask your broker, or an independent healthcare advisor, to sit down with you and review the details of your healthcare spend and to educate you about some of the new ways you and your team can purchase healthcare more cost-effectively.
Taking a step back and spending time thinking strategically about your healthcare spend and the long-term sustainability of your current strategy will prepare you for a better path moving forward. One that may even reverse your trend and lead to better benefits and lower costs. Revitalizing your healthcare plan without the agony of raising deductibles or payroll deductions will be a welcome change at your next renewal.