When it comes to the question of high health care renewal rates, there is no magic solution. The rates should be thought of as a process rather than a destination, in other words, the best end result stems from planning.
Naturally, rates will go up from year to year – we all expect this. It is the nature of employee benefits plans but by planning ahead, we can make the most of any renewal situation, allowing us to stay positive even when the renewal is not a desirable one.
It is not uncommon for organizations to face increases of ten percent or more. In the face of such a hike, an employer must decide whether to continue the current benefit plan levels or look at creative alternatives to lower the benefits cost curve. Once this decision is made, the employer must then decide how to divide the premium between employer and employee. In addition to analyzing plan design options and contribution strategies, it is important not to forget the wellness strategy.
Many forward-thinking employers consider the health and well-being of the employees in terms of lifestyle, solutions to potential problems and opportunities for them to become healthier and to increase their understanding of general health care. Employee habits – such as food consumption and exercise routines – are important to consider because they are often at the core of employee health.
Insurance company administrative fees certainly do add to health care costs, but the true cost of health care comes down to the actual care: what doctors charge for services, the cost of drugs, hospital expenses and how much employees utilize all of these things. The sum of these parts is the cost of health care we don’t often discuss.
The healthier the employee, the less health care resources they will have to utilize. On the other hand, an unhealthy employee may have interactions with health care professionals beyond the normal preventative care that most people incorporate into their lives, and more intense and costly interactions with the system.
The employer who considers how to improve the well-being of his employees is also doing a great deal to reduce premiums. Of course, this may not be what most employers want to hear in the face of a twenty-five percent rate increase, but by beginning to encourage employee wellness, there is a real chance that a large rate increase can be avoided in the future.