What is in this article?:
- How to Control (or at least minimize) Your Health Care Costs
- Devising a Health Care Reform Strategy
There are several options a business should consider to help keep health care costs and related premium costs down. While it’s critical to take a strategic approach, owners and management want ideas in the short-term that can reduce their costs.
There have been countless stories in the news of late about rising health care costs as a direct result of the Patient Protection and Affordable Care Act (PPACA). Experts estimate that health care costs could increase 30 percent due to the influx of previously uninsured individuals obtaining services.
In these cost-conscious times, this projection has many business executives worried. Some are taking action. Regal Entertainment Group, a national movie theater chain, announced it would reduce non-salaried workers’ hours to control costs. According to one news report, managers are resigning because their hours have been cut 25% or more. This situation brings to light what may be an unintended consequence of Regal Entertainment Group’s decision: loss of experienced talent.
Rising health care costs should be a concern for executives, but they can’t forget the strategic impact their decisions could have on their organizations. Here are some key considerations and ideas on controlling costs and devising a health care reform strategy.
What Will Happen Next Year?
Starting on or after January 1, 2014, employers with 50 or more full-time equivalent employees (FTEs)—considered large employers—must offer health insurance that fits certain affordability and coverage criteria or possibly face a penalty. These penalties are not tax deductible. This could have an immediate impact on an employer’s cost to provide health insurance. For example, a group of employees that had pre-existing conditions and were considered uninsurable may now enroll in the plan, which could cost the employer more in premium costs.
Also, the health care law changes the status of some who had been considered part-timers for insurance purposes to full-time employees. In certain industries, many employees have not historically taken health insurance, sometimes as much as 66% of a company’s workforce. These employees will need to be offered coverage, potentially tripling costs.
For companies with fewer than 50 employees, PPACA doesn’t have the same impact. However, these smaller organizations, especially those that are growing rapidly, need to understand PPACA and be prepared to comply in the event they suddenly have 50 or more FTEs.
Controlling Health Care Costs
The primary concern of many businesses today is how to control rapidly rising health care costs. One of the selling points for passing PPACA was that it would help reduce health care costs. There are several options a business should consider to help keep health care costs and related premium costs down. While it’s critical to take a strategic approach, we understand that owners and management want ideas in the short-term that can reduce their costs. Here are several such ideas.
If your business is fully insured, you could consider self insurance. This generally means that your business would take on additional risk, but not all of it, for a reduction in premiums. If your business is currently self-insured, consider increasing your stop-loss point and reducing your premium.
Get the Best Price
Have you challenged your provider to give you the best price available? If not, this is the time to do it. Find out what your company can do to qualify for the discounts that are available.
Conduct a Claims Audit
Make sure your insurer is paying your claims accurately and that you are only paying for those eligible for benefits. You could be overpaying. An independent insurance consultant or an accounting firm with specialized services could assist you with this project.
Start a Captive Insurance Company
Captive insurance companies provide a formal method to reinsure, or to develop a fund to reduce your reliance on private insurance. This risk management tool has been used to reduce the cost of property & casualty insurance for many years. Rising health insurance costs make captive insurance companies a great option to help control those costs. Recent developments have made this captive option more accessible for smaller to mid-sized companies.
Form a Private Exchange
Another potential solution is to form a private insurance exchange. This may be complementary to forming a captive insurance company, in that the entity forming it creates its own marketplace. This may qualify as providing insurance with a defined contribution that may help control costs.