Over ninety percent of the country uses some form of health insurance. As a business owner, you could be mistaken into thinking that it is always a high-value proposition. More and more people are complaining every year about health insurance. Why is that, and what can you do about it?
Let’s talk about what needs to happen to improve healthcare and its associated costs.
Insurance carriers often claim that they offer high-quality coverage while maintaining low prices. Despite this, their benefits continue to go down every year, while their premiums increase.
At the same time, the very hospitals where we expect to receive treatment for illnesses claim to care for our wellbeing. As it turns out, outcomes continue to decline in the USA compared to other countries, when they should be well in advance of these other nations.
Finally, insurance brokers claim that they can provide the best insurance plans, plans that improve over time. The truth is that these brokers continue to get larger commissions every year while no changes occur that affect the rest of us.
Why has the service we are being provided declined over the past 30 years? Why do these companies keep promoting themselves as exemplars of healthcare?
The answer is very simple. Money.
Medical Loss Ratio
Because of the medical loss ration provision, carriers make much more money as claims go up. They should make money as claims go down, and most CFOs think this is the case, but it is not.
Most hospital environments are transitioning (or have transitioned) into fee-for-service centers. This means they provide the minimum standard of care, and the care that they do provide is not as high a priority as making a profit.
Many brokers work on commission and aim to receive bonuses at the end of every quarter or year. Thus, as the insurance rates increase and health insurance payments decrease, they get more money. They are not incentivized to suggest prices decrease.
Health Insurance is a Profit Center
In short, everybody a company might engage with makes more money as quality goes down and costs increase. This happens year after year, quarter after quarter. It only gets worse as the financial performance of that health insurance increases to appeal to stakeholders.
How Do You Fix This?
1. Change the incentives of your employer-based plans so employees benefit
2. Change how you pay the broker to no longer be commission-based
3. Change how you pay the carrier so incentives exist to provide high-quality insurance
And most important:
4. Change how your plan pays for care so the plan covers the medical bills with the least burden on the employee
Where Can You Learn More?
There are plenty of disappointments in how most employee benefits work, but we know how to stop being perceived as a profit center and nothing more. If you have questions about how this can work, you should get in contact with us. Our specialists are on-hand to discuss our options with you, so pick up the phone and give us a call today.