Overseeing and administrating an employee medical plan can be a highly time consuming endeavor. It is not unusual to see business owners and their executives devoting hundreds of hours annually to organizing, planning and disseminating employee plan offerings. But are businesses always getting the best value for their executive staffs’ time? We have found that healthcare cost containment can be achieved through various means, such as defined contribution strategies, health savings accounts, and caps on select procedures.
Employee collaboration yields greater satisfaction. Companies using a defined contribution strategy typically decide on a fixed dollar amount to be allocated per employee in order to provide employees the incentive to participate in their own benefits allocations. For example, a company grants each employee a $5,000 fund, regardless of family size. Each employee would be encouraged to select the benefits tailored to his or her family needs. While one employee may place a high value on disability insurance, another may be planning for future surgery and may reduce benefits in other products. Thus, the employer can exit the renewal game and incorporates employees’ priorities as part of the total benefits plan.
More dollars in employees’ pockets. Health Savings Accounts (HSAs) or Health Reimbursement Accounts are another way employers can maximize their offerings. These are cash accounts that put money in the pockets of employees while encouraging employees to shop around for their best values in health care. An HSA engages employees in the buying process and creates a “health marketplace” from which to choose services.
Tools to survey the pricing landscape. Health transparency tools also contribute to cost savings. For example, some large employers have capped certain procedures, such as the rapidly rising knee replacement surgery. With knee surgeries tripling nationwide over the past 10 years due to rising obesity rates, the employer can use recent data to provide an expected cost and corresponding payout of this procedure and then invite employees to comparison shop to stay within that price range. This engages the employee to actively participate in his or her health care decisions and removes one aspect of employer oversight.
There are countless “shop-able” procedures that can be outlined using the tools above.