In 1936, F. Scott Fitzgerald wrote a 3-part column in Esquire magazine. In it, he claimed, “The test of a first-rate intelligence is the ability to hold two opposing ideas in mind at the same time and still retain the ability to function.” If Fitzgerald were writing about health care today, he could have said much the same thing – if only to prove its impossibility.
In mid-July, Arthur J. Gallagher & Co. issued their second annual Benefits Strategy and Benchmarking Survey. Benefits advisors will note with little or no surprise that the two greatest concerns among respondents are (1) the need to control benefit costs while (2) attracting and retaining a competitive workforce. This is good news for benefit advisors.
When asked how they planned to deal with these twin challenges, the majority of employers (54 percent) indicated that they would increase employee plan contributions. Increasing deductibles (43 percent), out-of-pocket maximums (36 percent) and copayments (30 percent) rounded out the top findings. This is good news for benefit advisors.
Moreover, only 31 percent of employers surveyed have analyzed the economic effect of health care reform on their company. A mere 10 percent of employers have any kind of rewards program in place. In addition, they have not taken the time to review their benefits plans as they would any other corporate asset and, as such, they have no measurable objectives. This is good news for benefit advisors.
Employer’s cognitive dissonance comes from knowing that they have a problem that must be addressed while simultaneously employing the same ineffective solutions on which they have relied – and which have let them down – for years. They need value-driven, 2014-style advice delivered via a multi-year benefits plan with defined and measurable outcomes. Focusing on this year’s hot product or the lowest premium plan and worrying about it 11 months from now won’t cut it.
A concurrent study by Health Care Service Corp. Research studied more than 316,000 individual Blue Cross and Blue Shield plans in Illinois, Montana, New Mexico, Oklahoma and Texas. The study found that employers migrating to a Consumer Directed Healthcare Plan (CDHP) realized cost savings in the first year; a trend that continued in subsequent years. An interesting component of the study’s methodology is that those included in the sampling were not only those who had selected a CDHP over those who had not, but also those who had been enrolled in traditional plans and who subsequently switched to an HDHP.
This is good news for benefit advisors.
Over a three-year average, members in an HDHP showed a decrease in medical expenses of 11.8 percent. Overall spending, which included medical and pharmacy costs, decreased by 10.5 percent. Inpatient costs were 23.5 percent lower, outpatient costs dropped by 5.1 percent and professional services decreased by 14 percent. HDHPs are time-tested and have well proven that when members have skin in the game, costs will decrease.
Thomas Meier, VP of product development at HCSC, points to what may be the key to these results. “Our program continues to provide members with opportunities to lower costs and get more out of their benefits year after year.” He also notes that resources, flexibility and tools help members to, “…make positive, informed decisions that will lead to sustainable behavior change.” This is good news for benefit advisors.
Employers are still not dealing with health care in a holistic manner. They continue to chase today’s problems with yesterday’s tools. The title of that F. Scott Fitzgerald column was “The Crack Up.” That is precisely what employers are heading toward unless someone brings them a new way to evaluate and implement their overall benefits strategies.
Benefit advisors have a unique opportunity to leverage client relationships to bring about the change in mindset and implementation that employers already know they need. And that is good news indeed.
See also: Are you as relevant as a VHS?.