On February 16, 2017, Eric Krieg, president of Risk International Benefits Advisors, spoke at the Health Action Council annual conference on “Benefits Plans: The Silent Killer of Your Employees’ Disposable Income – New Rules for Benefits Management.” Eric’s presentation highlighted proprietary data from a recent Risk International Benefits Advisors (RIBA) study which analyzed 10 years of national wage trends and health plan costs. The study, “Health Plan Costs Devastate Middle America’s Disposable Income”, found that while base wages have risen minimally for most Americans over the past decade, employers made a shift to a larger percentage of the financial burden of escalating health plan costs to employees during that same time frame. The result is some employees taking home even less money today than they did 10 years ago, and others seeing only small take-home pay increases that aren’t keeping up with inflation.
During his presentation, Eric said “Our study shows that employers need to rethink the way they approach and negotiate their benefits plans. Instead of simply accepting higher health plan costs as a forgone conclusion and passing the financial burden on to their employees, companies should find ways to reduce costs without sacrificing the quality of the services provided. This is a strategic imperative for companies that want to remain competitive from a financial and recruiting standpoint, especially at a time of lowering unemployment rates. The good news is, there are proven strategies to do this, however a new paradigm is required.”
Eric outlined an approach to fundamental changes necessary to attack benefits management in a new and different way. With an understanding of a company’s population income demographics, one can determine the next course of action to meet health plan goals. Employee benefits decision makers should begin with approaching solutions with “Yes, if”…not “no, because,” when evaluating changes and stop managing to the outliers who make up the vocal 5% minority. Identify low value add activities that you can stop doing or delegate to a vendor you already work with. Review the scope of services or statement of work in the contracts to ensure you’re receiving the value you’re already paying for. Managing vendor performance is often overlooked, but vitally important. It should be viewed as a three-step process: 1) Maintain important contract terms to monitor and evaluate 2) Develop and implement an annual operating plan, and 3) Evaluate performance to ensure you’re getting the value you’re paying for.
Organizations should commit to foundational change by establishing the right benefits platform with best-in-class integrated solutions. They should utilize employee advocacy to assist with education, communication and health system navigation and take action by tightly managing utilization and cost of services rendered. One such approach is to investigate opportunities to vary premiums, deductibles, and out-of-pocket expense maximums based on workers’ wages to make plans manageable and affordable for all income levels. Encourage the use of available preventive services without cost-sharing to help mitigate high costs. You should expect more from members as they enter the health care system. Your employees’ reward is an affordable plan with manageable financial exposure.
By incorporating a new plan management approach, your company will be able to offer effective and affordable coverage to your workforce, while recouping wasted healthcare spend – putting money back into your business and your employees’ paychecks. Your employees will certainly thank you for this.