I consider myself to be an avid sports fan, as I can find a way to enjoy most - if not all - sporting events. What connects me to any sport is the strategy behind the pursuit of victory.
One sport I historically had a difficult time connecting with, or even sometimes classifying as a sport, is NASCAR. My mother and father-in-law are devoted NASCAR fans, but I just couldn’t understand the strategy in making left-hand turns on an oval track. One fateful day, my father-in-law secured for me what is known as a ‘pit pass’. For those of you that know where I’m going with this, the ‘pit pass’ will quickly change one’s entire perspective on stock car racing. In the pit, you experience not only the athleticism of the pit crews, but also the crew chief as he gathers and dissects all kinds of data: fuel usage, wind speed, tire wear, and even track temperature. These factors - along with a whole host of other influences - greatly impact a car’s speed and durability over the 400 mile race. It is the strategy in managing these minute factors that makes the difference between winning and losing.
This past week marked the end of another NASCAR season, and as I watched the championship race on Sunday, I found myself thinking about the importance of strategy and the need of having a well thought-out plan when looking at the upcoming benefit renewal season. With that in mind, here are five tips for developing a strategy as we approach the New Year:
- TAKE A NEW, FRESH LOOK AT THE DATA. When I say data, I don’t just mean the claims reports. While claims data is important, other data points can help influence the direction of your strategy . These factors include employee utilization and understanding of how to access proper care. (If your plan includes services and resources that are not being utilized, find a way to shift the expense of paying for those services to an area that may be in need of some ‘sprucing up’.)
Do the participants within your health plan know where to access proper and cost effective care? Are they utilizing the emergency room for non-emergency services? Do they understand the difference between name-brand and generic drugs? Do they have a primary care physician and how many are participating in annual preventative care?
Perception is also a key data point to review. As a company, the cost of providing benefits and health care is often found within the top five expenditures of a P&L statement. If you are not asking your employees what they think about your current benefit offering, how are you gauging the return on that investment? Can you really call your plan a benefit? More importantly, would your employees call it a benefit? Employees are the key metric in finding out if we are getting a good return on our investment. By not asking for an opinion, we may be taking for granted their perception which may leave us finding that the overall return on our dollar may be dismal at best.
- DON’T RULE OUT MARKET OPTIONS. In the past, options that may have seemed unlikely, may now be worth considering for your changing organization. The federal exchange might very well be a good alternative for some organizations. For many employers, the cost of providing access to health insurance may prove to be detrimental to employees who might be better served in the individual market with access to federal subsidies. Take a look at the overall cost of providing access to an employer sponsored plan, weigh the tax advantages, the perception benefits, and make an educated decision. Don’t forget to look at the income of your employees and weigh what subsidies they might be eligible for based their pay. For most companies, the marketplace may not be the best fit - but if you are not considering it as a serious alternative, you may be doing yourself and your employees a disservice.
Self-funded plans have come a long way over the past decade. With many traditional insurance carriers now looking at more flexible ways to navigate the new health care law, most have gotten into the partially self-funded market. While in the past, companies without multiple years of credible claims data and the ability to spread risk across a large employee population would never consider self-funded plans, today’s market provides access to creatively structured plans that allow employers to gain access to better data, and take a more active role in managing their long term costs. In some cases these new plans can even be written in groups with as few as 10 employees. The pendulum can swing widely in a self-funded/partially self-funded plan, so make sure you know your risk before jumping into one and always consider the ‘exit strategy’ should you decide to jump in. Remember that the ability to get out of a plan is as important as how you get in to one.
- STOP MAKING ONE YEAR DECISIONS WITHOUT CONSIDERING THE MULTI-YEAR IMPACT. Employees, much like employers, hate changes. The days of jumping from carrier to carrier each year to avoid increases are coming to an end. With the continued roll out of the ACA, many carriers will be moving to community rating and new MLR (managed loss ratio) strategies. What that means is that the pricing variance between carriers will be getting more narrow in the years to come. In 2015, all groups that have less than 50 employees will be faced with community rating. While for a few groups this might not be the worst thing, for most, community rating will prove to be difficult pill to swallow. For groups between 50 and 100 employees that pill will be served up to you in 2016. If you are not taking a look at community rates for your company and how that might impact you in 2016, you are not serving yourself well. It’s important to understand where a carrier’s growth market is and try to gather information about their approach to the market over the next few years. Focus on what you want your plan to look like in 3 to 5 years and start making strides to get it there. Look at long term budgets and begin the process of making decisions today that will get you to where you want to go in the future.
- BE NIMBLE. Legislative influences have greatly impacted decisions within the healthcare market since 2010. While we can almost be assured of additional changes coming down the pike, employers cannot continue to wait until those changes occur. Make a decision as to where you want your plan to go, but be willing to make adjustments as the law requires. It’s been said that the only two things in life that are guaranteed are death and taxes…in the benefits world, you can add changes to the ACA to that list. Accept that and be ready to change with it.
- FIND SMALL THINGS THAT MAKE BIG IMPACTS. You would be amazed at all of the ‘bells and whistles’ that may already be built into your health plan. Discounted gym memberships, health and wellness features, access to nurses, or maybe even doctors over the phone may already be built in. As part of preventative care, most plans now cover an annual vision visit for each member. (Many plans have discount vision benefits to help with the cost of glasses and/or contacts.) If you are fully insured, you likely are paying for many - if not most - of these services already. However, if your employees don’t know that these resources are available you need to highlight them. Present these to employees as new benefits because for most, they will be. Look for other ways to make improvements to the plan offering that may not ‘break the bank’. Things like increasing life insurance amounts can be perceived as a great benefit, but only add a few dollars to the bottom line. Also look at voluntary benefit options, but give your employees an allowance to purchase some of these policies. For anyone that has kids, an accident plan can often be purchased for less than $10 a month, but almost always pays for itself at some point throughout the year.
Again, ask yourself, ‘what is our organization’s short and long term strategy’. It’s important to accept the fact that traditional ‘benefits’ aren’t really perceived as benefits anymore. Employees often feel Health Insurance is an entitlement. Accept that and find new ways to build out your benefits package in ways to ensure it is perceived as a benefit
In summary, review your data and make sure you know as much as you can about your employees and their needs. Don’t rule out any option within the various markets that you might have available to you; look at them all, weigh those options and make a decision, keeping in mind the long term impact. Ask yourself, ‘is this year’s decision getting me closer to where I’m wanting to go or is it just a stop gap?’ Be flexible and open to new ideas. Don’t bury your feet in concrete as you may be impacted by outside factors that are out of your control (i.e. the federal government). Recognize that, and don’t stress out when the curveball comes. When communicating to your employees, make sure you point out all the features of your existing plan, and look for ways to provide new carrots (especially if you are going to have to bring out the stick in other areas). Finally, finish the race. Don’t make decisions without a defined strategy. Focus on what is most important in the next 12 months and where you want to be in 36-48 months. Be creative and find a way to make your benefits plan a benefit again.