Part 1 of this three-part series answered this question by addressing the fault of health insurance brokers. Part II of this series shifts to the culpability of employers who provide insurance to their employees.
The employer-based health insurance system that we are familiar with in this country is very unique. No other industrialized nation has anything quite like the American system which developed as a means to circumvent wage controls that were imposed by Congress during World War II. Since that time, employees have come to expect fringe benefits such as health insurance as part of their total compensation package. In this system, we entrust our employers with some very important decisions that largely determine what our cost of medical care and access to medical care will be. We rely on our employers to make good decisions that will afford us better access and cost control than we would have on our own.
A very disconcerting pattern that I see as I interact with Human Resource and Finance Executives is that heavy workloads and apathy prevent decision-makers from spending the time necessary to make and implement good decisions on behalf of their employees. All too often, the decisions are made late in the game without a proper decision-making process and the path of least resistance is taken. That path of least resistance is usually to simply renew the current plan and absorb the customary double-digit increase or to weaken the plan in some fashion to save money. Shortsighted decisions such as these lead to higher premiums and/or higher out-of-pocket costs for employees.
The average Employer Premium Contribution in 2009 is $4,824 for single coverage and $9,860 for family coverage (The Kaiser Family Foundation and HRET, 2009, p. 2). The cost of benefits can easily add 10% or more to the total cost of compensation for an employee. We are not just talking about the cost of free sodas in the break room here. These decisions merit the best decision-making skills of HR and Finance executives. A thorough and responsible decision-making process includes the following:
Internal research to learn about trends and best practices in benefits
An early dialogue with the broker - a good broker will initiate this dialogue several months in advance of the renewal
Exploration and discussion with other brokers and administrators to make sure your broker is the best option for you and to allow healthy competition to work in your favor
A willingness to make changes to plan design, carrier, and/or broker in order to contain rising costs without sacrificing the quality of coverage
I am an HR Professional and I have been through years and years of health insurance renewals on the employer side prior to coming to the brokerage side. During those years as an HR Director, I was at times guilty of rushing the process, guilty of being closed-minded, guilty of making dangerous assumptions, and guilty of not doing my due diligence before making decisions that would bind my company and employees for another year.
The best renewal experience I ever had, though, was the year I took the time and effort to truly make the best decision. It was the year that I put my time constraints and assumptions aside in the interest of finding real solutions. In that year, solutions were found and decisions were made that led to a 30% savings for the company and yet better coverage for the employees. These win/win outcomes were very gratifying and well-received, especially in a year when the company would have otherwise been forced to cut benefits or pass on more cost and liability to the employees. Those outcomes were only possible though, because of a willingness and determination to find solutions to the problem of rising health care costs.
HR professionals clamor for the same recognition and respect that other leaders in the organization get. These are the types of outcomes and decisions that will vault you as an HR professional to a higher level of respect and influence within your organization. It will not come to those who always accept status quo and allow problems to get worse every year. Approach your next renewal season with a determination to make it the best renewal ever by solving the nation's problem of unsustainable health care costs for you and your employees.
Reference
The Kaiser Family Foundation and Health Research & Educational Trust (2009). Employer Health Benefits 2009 Annual Survey (Electronic Version). 2
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