Is your health insurance program the wrong fit?

Posted by Ed Purcell on July 29, 2016

For most employers, savings are being left on the table
and improved decision making left off

In spite of repeated nationwide news commentary and media coverage telling of the continual reduction of employee benefits, research actually demonstrates that many employers have stocked their health insurance programs with more coverage than required by their employees.

study by Accenture revealed that more than one in four employees are inclined to select a lower priced health insurance plan if given the choice on a private exchange, providing it is supported by robust decision support capabilities.

In this 2013 study, 81% of respondents were willing to increase their deductible to save $50 month/$600 year. Yes, they welcome the cash, yet 57% indicated they would also consider applying savings to acquire other ancillary benefits. More interesting is that 48% expressed willingness to tap their own wallet to acquire these ancillary benefits, which tells us they value health and choice, and are willing to invest in these important benefits given the opportunity and platform to do so with confidence.

Private exchanges have the potential to not only provide cost savings, but also peel back the curtain to additional data needed to hold down costs while delivering better service to employees. A more informed and educated employee will more likely make sound financial decisions for themselves and their families, enhancing the value of their dollar, and often times saving their employer premium dollars in the process. Providing employees and decision makers with this data allows for greater insight into insured behaviors and cost drivers, while facilitating more meaningful solutions to be put into play that can help attack the root issues and bend the cost curve.

Fast Followers Have Most to Gain

At the 2015 Conference Board “Private Health Insurance Exchange” conference, early adopters from several large employers shared why and how they made the change to private exchanges, as well as the lessons they’ve learned.

The following are key takeaways presented by exchange providers, consultants, and an enthusiastic group of employers who were eager to share their experiences:

Employee Choice
  • The best feature of an exchange for employees is choice
  • Exchanges make sense because choosing benefits involves very personal decisions and it’s a confidential way for employees to optimize their care
Employee Expectations
  • Employers must respond to a new set of expectations, as 70% of employees believe their organization should understand them in ways comparable to that which employees are required to empathize with their external customers
  • Increasingly, employees expect everything to be available to them on a mobile device – for private exchanges that means physician finders for each network being accessible through a mobile app.  This is extremely important in workforces that don’t have daily access to a computer as part of their normal duties
The Cost Factor
  • More than nine out of ten early adopters of private exchanges are satisfied that it is reducing costs.  The driver of these savings come from several different avenues – whether through alternate premium subsidy strategies, more informed product decisions, or some degree of increased consumerism
  • Private exchanges have the potential to create actual savings in the cost of health care, the more they grow in size and amass data that when analyzed can be predictive. These predictions are windows for potentially better service and cost reductions
.
Decision Support
  • Key takeaway:  More than nine out of ten employees said the delivery methods of benefit information helped them make informed choices
  • Employees enlisting on the exchange know that they will need help in the form of decision support and, once engaged, they appreciate its value even more.  It truly allows each and every individual employee to customize the package that best suits their needs
Administrative Ease
  • Cost aside, ease of administration and a favorable employee experience are two other big reasons employers switch to private exchanges
  • The integration of systems that Exchanges bring helps to ease the burden on the HR staff, allowing that everything is available to them from one source – no need to juggle multiple systems to find what is needed
The Future of Exchanges
  • Personalized products are the future of digital health care – this will have an impact on insurance
  • Younger employees will continue to demand technological solutions for traditional HR issues

Enjoy Both:  Cost Control and Data

Purchasing decisions are trending toward more customizable, individually sourced solutions. This environment has become an arduous – and I would even argue an impossible task – for but a small group of decision makers to decide what the best fit may be for hundreds and sometimes thousands of individual employees, all with unique sets of risk tolerances and needs. 

As most early adopters can tell you, private exchanges offer windows to controlling costs, providing predictable budgeting and streamlining benefits administration. Meanwhile, it empowers employees to make informed purchasing decisions about the benefits that conform to their lifestyle, as it provides a wide range of choices that can better lower their financial risk. Lastly, it allows the employer to maximize the value of its benefits program as a recruiting and retention tool.

Private exchanges are a win-win-win solution - please contact me if you would like to learn more and to see if this approach may be the right fit for your organization.

Contact Ed Purcell, 216.350.5052, [email protected]
 
SHARE THIS:    

About the author Ed Purcell

Ed Purcell leads the employee benefits consulting arm of Cleveland-based Armada Risk Partners, an all risk insurance brokerage. As a Senior Vice President and founder, he focuses his counsel on assisting small and middle market employers when developing and executing innovative and cost-efficient employee benefit strategies.