INSANITY: Doing the same thing over and over again and expecting different results.
Nothing screams “Insanity!” like the status quo in employer-sponsored healthcare plans.
Here are the facts:
- Healthcare costs and insurance premiums in the U.S. increase annually and have more than tripled since 1999; and
- The quality of healthcare the system delivers is frighteningly hit or miss: Maybe you choose an exceptional doctor with excellent outcomes, or maybe you get a dangerous doctor facing multiple malpractice suits. The hospital you select may be extremely safe, or it may be riddled with potentially deadly infections.
Yet, year after year, when it comes time to renew their healthcare programs, companies across the nation double down on the insanity, simply rubber-stamping their existing policies to accept the cost increases and settle for uncertain and unpredictable healthcare quality.
For most companies, healthcare is the second or third largest operating expense after payroll. Yet, although executives manage the cost every other purchase, sometimes negotiating down to one-tenth of one cent, few rarely push back when their group health premiums rise 5% to 15% every year.
Executives are delegating healthcare cost containment to the insurance companies, but how is that working? The insurers’ “provider network discounts” save companies 40 to 60%.. off what? These discounts are off arbitrary, highly inflated hospital and drug prices that no one pays…prices that are marked up two to even 10 times* the hospital’s or drug’s actual cost. Isn’t this the same racket that sketchy jewelry stores run promoting “90% Off All Gold Necklaces”? Any discount off an arbitrary, inflated retail price is a deceptive practice, regardless of the size of the discount.
To add insult to injury (sometimes literal injury to employees from dangerous docs and unsafe facilities), status quo brokers will triumphantly claim that they’ve created “savings” by reducing your annual rate increase. Instead of the original 15% increase you received from the insurance company, the broker has negotiated it down to just 10%, thus delivering your a 5% savings. What? Savings are created when less money is spent, not more. If your rate goes up by the less-bad increase of 10%, you’re still spending more than the previous year. Although it’s simple math, companies continue to accept these phantom savings as real.
Employer loses, the broker wins
Oh, and most of those status quo brokers are paid a commission, usually three to five percent of your total health plan premium. Therefore, when your next-year’s premiums increase, so does your broker’s commission. If you’re paying 10% more, your broker just got a 10% raise…for doing what, exactly?
Companies accept this insane status quo in part because they’re never told they have options. Plus, large companies like the comfort and prestige of being serviced by a big-name insurance brokerage, despite the ever-rising cost and the questionable care provided. Smaller businesses, on the other hand, feel that offering enticing benefits to attract and retain top talent requires a recognizable insurance company with a large provider network. And what looks better on paper than a name-brand insurance brokerage or one of the big, national insurance companies?
Real options, real savings
However, what looks good on paper often is not necessarily what’s best for employees, employers, or your company’s bottom line. Today, there are smarter options to the status quo that provide higher quality care for a much lower cost.
Progressive executives across the U.S. are rejecting the insanity to partner with next-generation healthcare advisers. Using standard business practices like supply chain management, these advisers both ensure high-quality healthcare and eliminate overspend, reducing year-over-year costs by at least $2,000 per employee per year, real savings that show up on your balance sheet.
These NextGen healthcare advisers, armed with the right knowledge and tools, can access and analyze a company’s medical and pharmacy claims data to provide executives a full understanding of their company’s healthcare cost drivers and prime savings opportunities. These advisers work with the C-Suite and HR to deliver better, less expensive healthcare; make healthcare a controllable cost; and eliminate overspend.
Companies no longer need to accept the insanity of the status quo – you no longer have to accept this insane system to provide healthcare to your employees. Empowered with meaningful data and workable options, executives can gain control over their company’s healthcare spend to provide their employees higher quality care while reducing costs. NextGen healthcare advisers are restoring sanity to employer-sponsored healthcare.
* Rand Corporation, “Prices Paid to Hospitals by Private Health Plans,” 2022.