Small business owners go through an annual, painful ritual to “renew” their group health plans, often in response to high rate increases. This causes budget shock, benefits reductions and major decisions to be made under time pressures. Fire drills are good for disaster planning, but not for managing a health plan!
Health insurance reform and industry consolidation are causing rapid change. It feels reactive and random, much like the tiny toy football players on those old vibrating game boards. Some of these changes bump into each other or shift uselessly backwards, while one or two advance the ball.
Lots of choices
If it ever was, health care is no longer a free market. This holds especially true if your health plan is “insured” by a major carrier. That carrier’s profit and costs are now regulated, its method for assessing your risk and rates is tightly prescribed, new taxes are imposed and costs are dramatically shifted from old to young. Lack of accessible information on claims and network costs multiplies the problem. Carriers will charge employers for losses in the new federal Health Insurance Marketplace. Hospitals will recoup their Medicaid losses.
The result so far is a stream of new plan designs making health insurance choices more like ordering a Subway sandwich than a steak. That can be good if you understand the choices (and there is some consistency in offerings year to year). It can be bad if you do not understand the effects of hot peppers.
Will you assess employees the age-based rates now used for more employers or shift costs to the young? Will you charge smokers more (the employer is charged more)? Does wellness matter any longer to a small business owner since the health of your group no longer affects rates? What happens when someone has a large claim before their Health Savings Account (HSA) grows? Are people ready for the many decisions necessary for proper plan management? Do most employers have the resources to make complex decisions and to advise employees on the small ones?
Your responses to this fire drill will affect your workplace culture and employee perceptions of their total compensation package. When my spouse gets the three-page small print letter from the insurer that reads like a legal release for a zip line ride, and asks me why the big print says we now have a very high deductible, I need to know enough to describe our plan and paint the whole picture.
We should no longer react each year to the higher rates and conflicting options dropped in the company mailbox like a bank foreclosure notice. Reverse the flow and design a plan that manages both your costs and your culture, then seek a vendor that supports your plan. You want an HSA if it completes the right puzzle, not just because it reduced this year’s increase.
Make annual health insurance renewal about financing a well-crafted plan, not the start of an unproductive fire drill.
Bruce Clarke, J.D., is CEO of CAI, helping more than 1,000 NC employers maximize employee engagement and minimize employer liability. For more information, visit www.capital.org.