MANAGING HEALTH CARE COSTS

There are two major components of health care costs, and within each of these, three contributing factors:

Claims, accounting for 80% of the costs, driven by:

• Price (charges for individual services)
• Demand (the frequency of using services, called “Utilization”
• Lifestyle (indirectly affecting the cost of health care are poor lifestyle choices, causing Preventable Illness and Injury)

Retention, accounting for about 20% of an insurance plan’s costs, driven by:

• Administration
• Marketing
• Taxes

Many efforts at controlling health care costs have focused on the retention factors that have the least overall impact. Some attention, too, has been given to the price of care. Much more needs to be done in influencing consumption of heath care services, both immediate response to an illness or injury (“utilization”), and adopting lifestyles that will prevent future illness and injury.

For Small and Mid-sized Employers, this may be through alternative plan designs and alternative funding mechanisms. It can be in conjunction with or separate from our Human Resources Administration.

Plan designs may include medical expense reimbursement accounts, health reimbursement accounts, flexible spending accounts, or simply more cost effective “tweaks” within a traditional insured program. We can also work with you to evaluate Consumer Driven Health Plans.

Alternative funding mechanisms may include partial self funding with high deductible insurance; or self funding with specific and/or aggregate stop loss. If you are uneasy about the risks of self-funding, we can arrange to hedge those liabilities.

We have the experience and the analytical tools to help you evaluate the probabilities of potential risks and rewards of alternative design and funding, and have the administrative systems to administer these plans cost effectively for small organizations.

For Larger Employers, we can:

• Do an overview of your Employ Benefits programs and identify cost saving opportunities
• Introduce you to cost effective third party administrators
• Introduce you to cost effective Pharmacy Benefit Managers (PBMs).
• Work with you to evaluate Consumer Driven Health Plans
• Discuss how to coordinate supplemental benefits and limited medical policies with Consumer Driven Health Plans to further reduce company costs but afford protection to the chronic health care users, or the risk-averse

For an article on what drives health care costs and how to control them, please contact BEST SOURCE, LLC.