By Donna Marshall
Chief Executive Officer
According to Benefits Specialist Magazine, “the HR (human resources) community has very little insight, wisdom or resources on the value they should expect from their insurance advisor.” But the problem is actually deeper than that: How can you pick a top-notch insurance advisor or broker if you don’t know what they should be buying for you?
If this resonates with you, pay attention.
Formal education vs. on-the-job training
Many colleges offer degrees in Human Resources, but most of the curriculum focus is on generalist needs, such as employee hiring, training, retention, and compliance with labor laws. What about topics to support understanding the fundamentals of the healthcare marketplace and healthcare literacy?
The Colorado Business Group on Health (CBGH), a not-for-profit employer-led coalition, conducted a focus group in 2016. Members of the CBGH tend to be well-informed in benefits and most purchase healthcare for at least 1,000 employees. They confirmed that they had learned “on the job” and their continuing education came from their brokers.
Health benefit administration is a sophisticated and complicated endeavor. It’s about procurement and contracting, HR informatics, and communications. And it affects people’s lives: More than 150 million American workers and their families get health insurance through their employers. And since 2007, premiums have grown 55%. Deductibles, which were virtually unheard of 25 years ago, are now averaging nearly $1,500 per person — and that’s after paying $5,700 towards their premium for family coverage.
Healthcare is complicated!
Why is healthcare purchasing so difficult? Some Chief Financial Officers point to the difficulty of negotiating for services they don’t deal with on a frequent basis. Human resource executives are often unwilling to risk the wrath of disgruntled workers — or their own bosses — if the health plan is changed or choice of providers is reduced.
Some purchasers still buy into the notion that there is a positive correlation between price and quality, when rigorous academic studies debunk that idea. According to the NORC Center for Public Affairs Research, six in 10 employers think plan quality ratings are important, but nine in 10 are unfamiliar with what those metrics are. CBGH employers also thought quality was important, but rarely used this type of metric in their purchasing decisions. “You can’t fight city hall” is the final cry of despair from many purchasers, as they confront the powerful healthcare industry.
Purchasers often turn to a topic that is more under the employer’s control: Wellness. Wellness programs abound and are often tied to a health plan. Oftentimes, an employer feels good about offering this benefit to its employees, and when the campaign is thought through and well-implemented, it can help the workforce engage in healthier lifestyles.
But wellness is a small part of the expenditure, and there is no evidence that wellness programs achieve a return on investment. Employees enjoy them as a perk but employer cost sharing for health plans is the behemoth.
Education changes the game
Purchasers often believe that their benefits advisor will give them the best options, but oftentimes they end up settling for rate increases that far exceed wage growth in their own paychecks. As long as the rest of the market is paying double-digit increases, it’s okay. Benefits consultants have even been heard saying “Employers don’t need to win at benefits, just play the game.”
So how can you change this? Use Knowledge Benefits and online health insurance classes to educate yourself on how the marketplace really works. Understand plan offerings’ options and the values (and pitfalls) of healthcare consumerism. Take the time to really do a cost-benefit analysis and work with other healthcare purchasers (employers, trusts, and unions) to explore solutions that the marketplace (YOU!) should be offering to its customers. The more you know, the better decisions you can make when designing an effective benefit program.