One of the primary issues of the day is health insurance! It was/is either too expensive, or not available to everyone, or both, and the government “needed” to get involved and correct the inequity. It is now deemed, by some, as a “Right”, similar to the other “Rights” enumerated in the constitution. While I have no quibble with those that point out the flaws in the current healthcare system, I do differ with some as to the practical remedy to those problems! The idea that the government is going to come in and make things better is not always a bad idea, but when government overreaches we sow the seeds for increased disfunction, an increase in costs and a reduction in goods and services. Sadly, many Carriers do not have a clue in public relations, and in the face of these regulatory threats they come out with seemingly obsene double digit rate increases! Not very conducive to gaining supporters. So where do we go from here?
Being an insurance agent, it distressed me to bring a family to a carrier as their COBRA was running out, and have the carrier say “Well, we’ll take the husband and child, but we decline to cover the wife!” There is something hypocritical in that fact that we can get around this by creating a small “Group” and get them all covered with no medical underwriting, even if it is a little more expensive. The carriers confuse the issue, and are inviting increased regulation, when they cold heartedly refuse to cover a family member, but will do so if applied for as a Group. What the carriers should consider is eliminate medical underwriting, and offer an open ended Group concept for the buying public. The Group concept is to be based on the idea that the losses on the few will be more than offset by the contributions of the many.
In the same vein, I am currently working with a Third Party Administrator (TPA) who doesn’t sell insurance, but administers group plans for businesses and organizations. Their value statement, if you will, is that they have actuarially determined the basis for a strategy that is allowing their customers to maintain their benefits while saving a substantial amount of money on their premium! This strategy is based on their determining that, over their 14 years in existence and over 3000 cusotmers, they see that only a small portion (4-7%) of employees are “heavy utilizers”, or the ones that will max out their deductible in a given year. And, 50-70% of employees do not use their health insurance, or use it so little it will not reaach their deductible.
The strategy uses high deductible plans to save 50% off the premium of a traditional plan (ie $500 deductible or $10-$50 CoPay plans). It is with those savings that we pay for the actual deductibles used, out of a company/organzation owned savings account, and after a small fee to the TPA for their service, results in a net 30% savings to the business or oganization. We are a lot healthier than we think as most of the focus of the press is on those who really need insurance and can’t afford any, or can’t get it offered to them by the carriers.
(Note-this strategy works best with a 5+ person group. Sole props and smaller groups, depending on their health, may want to use the strategy but with a personal HSA (Health Savings Account). They can use contributions to this account to pay qualified deductible expenses and write those costs off.)
This strategy is working for every group cleint I have (from 9 to -67 employees), and the TPA claims to have a 95% renewal rate. That tells me, in this market, where your policy is shopped every renewal because of the onerous rate increases, its not so much WHO you pay, but HOW you pay that delivers real savings! This “Partial Self Funding” approach is not only backed up by our experience, it is supported in the fact that very large employee groups (over 200 employees) save substantial amounts by self insuring themselves, and contract with a carrier to manage the plan, and cover any losses over a cetrtain amount (kind of a stop loss that limits the companies total exposure).
Companies have faced three choices too date; 1) accept the rate increases and hurt the bottom line, 2) ask your employees to kick in more to stem the pain of the increases, or reduce or eliminate benefits altogether. None of these are attractive choices! With this strategy companies can maintain the benefits their employees enjoy (and even improve the benefits once they see the savings), while saving considerable sums on one of the largest overhead costs, after salaries. Its a win/win situation!
Contact me for a FREE comparison to what you are paying now, and lets see if we can rein in these large and escalating expenses? 650-FARMERS, or ctrowbridge@farmersagent.com. or visit http://www.trowbridgeins.com/new/group.php