The only HEALTH PLAN you need

Employees are generally risk adverse and almost always over-insure themselves. Employees may not make the best decision if more than one plan is being offered. VFBC believes that one high-deductible health plan, structured correctly, could meet the needs of most employees. HR may have a “fiduciary” responsibility to make sure employees are not offered plans in which they should not enroll.

THE BACKGROUND

What do we mean by “over-insuring?” Employees pay whatever it takes to have the lowest deductibles, co-pays and out-of-pockets without regard for their utilization or their payroll contributions.

Health care has moved so far away from what was originally intended – to protect workers’ assets from catastrophic loss. Our plan is to work with clients to maintain that element of coverage with out-of-pocket maximums at high, but not unreasonable levels (i.e. $3,000 single and $6,000 family). We also want to support appropriate behaviors and provide a consumerism element within the plan. It is no surprise that employees spend their own money much more conservatively than someone else’s (in this case their employer). Generally you can expect up to a 20% reduction in utilization without reductions in quality of care – or said another way – you are able to remove waste without compromising truly necessary care.

THE NUMBERS

You can’t argue with the science of mathematics. Surveys now reveal that employers spend about $10,000 per employee on healthcare. Many employers manage to this number, and while this figure is important, it doesn’t tell the whole story.

If you remember your fifth grade math, the mean (or average) is that $10,000 figure. But how many employees actually incur claims at that level? The answer may surprise you – typically only 10% to 15% of claims are higher than the average. A more relevant figure as you plan your strategy is the median – or “middle” claim. If you spreadsheet all the claims incurred by members what would be the middle claim – the figure where 50% of members have less and 50% have more. For almost all employers that figure is around $700 to $1,000. So how can you use this fact – the fact that 50% of members have less than $800 in claims?

THE PLAN

Develop a high deductible plan but provide employees with employer funding and allow them to “earn” additional funding if they perform certain wellness activities. The plan would accomplish the following goals:

1.     Provide most employees with 100% coverage (makes it an easier “sell” to employees)

2.     Create employee ownership of health care expenses

3.     Provide incentives to take appropriate care of themselves

4.     Still provide catastrophic coverage

Yes, some employees may need to pay more (those with higher claims) but they are also receiving the most benefit from the programs. This one plan would simplify administration and help control future cost increases.

We have developed these plans for our clients and they do deliver the expected results – without much, if any, employee backlash.