Are you aware of the self-funding health care options available for your company?
Many companies offer a fully insured health care option to their employees because it is any easy option of providing health care. As a more traditional choice, companies are required to pay a fixed premium to the insurance carrier for the year. From there, the carrier pays the claims for the company throughout the year.
The main downfall with fully insured health care is that companies pay the same rate no matter how many employee health care claims are processed throughout the year. This gives the upper management of a company a very hands-off approach to providing health care.
With self-funded health care, the company directly operates the health care plan they provide, not the insurance carrier. By breaking away from the traditional health care plan, companies can see more financial control, lower costs, and greater flexibility.
But does self-funding develop healthier companies?
When the employer takes insurance into their own hands, they hold a better understanding of the employees’ health through the processed claims. This in turn gives the company a good reason to care about the improvement of their employees’ health.
By implementing strategies to improve the overall health of employees, the employer develops a positive feedback system. In return, the company lowers the overall claims processed at the end of the year. In most cases, as the CFO gets to the year end, there is actually more liability recorded than needed because the risk manager was able to make the number of claims expensed better than expected. The money invested in insurance that is not used towards claims is then returned to the employer. The employer turns an otherwise 100% expense, into a possibility of a return in this way.
Are you looking to develop a healthier company, starting with the health of your employees? Start by offering self-funded health care option and implement programs that will encourage employees to get active and become healthy.
To learn more about all of the benefits associated with self-funded health care plans, read our article Self-Funded Health Care Plans Offer Great Benefits.
With the inauguration of President-elect Donald Trump just a few days away, Congress is actively working to repeal and replace the Affordable Care Act (ACA) with the goal to lower the current health care costs. However, this is a difficult task with the harsh reality that someone has to pay for the sick people that are expensive to cover.
The fact of the matter is that only a small percentage of people make up the majority of health care spending. In a recent article released by The Wall Street Journal, Anna Wilde Mathews writes:
“A small number of high-cost patients have long generated a large proportion of health spending. The 10% of people with the highest costs accounted for about two-thirds of health spending, according to the Kaiser Family Foundation, a health-care research nonprofit, when it quantified the phenomenon in 2013.”
To cover the costs of these few individuals, healthy people are required to pay higher premiums that finance the costs of the sick.
This not only applies to the nation, but also within individual companies. Often times, only a small percentage of employees make up the majority of the claims within a business. Resulting in the employer to cover the high costs of only a select few employees. With that being said, it is extremely important to manage these claims by allowing the company to audit the large claims coming through for billing accuracy.
Read Health Care’s Bipartisan Problem: The Sick Are Expensive and Someone Has to Pay, from The Wall Street Journal for more information.
Drug makers have received many attacks about the dramatic increase in drug prices over the past few years. Most recently under public scrutiny was Mylan Inc. with the price spike in their well known allergy treatment, EpiPen. Companies are now attempting to add transparency to the system to rid consumer speculation.
Recently, Johnson & Johnson announced that they will release a report next month that outlines the change in prices for each of their prescription drugs.
In an article released on The Wall Street Journal, Jonathan Rockoff writes:
“The report will give the average increase in the list prices for all company drugs in the U.S., as well as their average price after the discounts given by the company, J&J officials said. The report will also show that J&J spends more on research than marketing, and about two-thirds of its sales growth comes from selling more drugs, rather than raising their prices.”
Although this report will provide some limitations, the added transparency is a step in the right direction for the pharmaceutical industry. Hopefully other companies will follow suit and help to shed light on the complex landscape for the general public.
For more information on this report, read the article, Johnson & Johnson to Report Average Increases in List Prices for U.S. Drugs, from The Wall Street Journal.