Depending on which source is referenced, healthcare expenses have been increasing anywhere from 6-12% on average year over year. We see employers getting hit with an unexpected 20% plus renewal that sets that company back for the upcoming year. Surely, employers are unable to continue and absorb these costs. Instead, these costs have been passed onto employees through higher deductibles (think prevalence of HDHPs), increased coinsurance rates and increased contribution rates for the employee. The employers have limited the damage done to their bottom line… but at what cost?
Since 2012, employees’ real wages (wages adjusted for CPI) have only increased about 10%. Contrast that with the medical spending increases of 6-12% a year, and the magnitude of the disparity is clear. It is harder than ever to retain current employees as they are paying more for lower quality benefits, and harder to offer cost effective, enticing benefits to attract top talent. These cost increases are an unsustainable trend that goes beyond affecting the employer. Companies must realize that at the core of medical spending increases is an employee who may be struggling to afford proper healthcare. There are solutions that not only provide relief for your bottom line, but can help save your employees money.
You rely heavily on an innovative broker to save money and provide guidance. There is only so much time one can devote to non-operating business activities. Solutions such as value-based surgeries, reference based pricing, transparency tools, wellness programs, and captive insurers, to name a few, can be massively effective in reducing your overall cost and freeing up capital to invest in current and future employees. Navigating new programs can be difficult, but when implemented correctly, they can save millions of dollars in less than five years. You pay your broker to manage this risk — don’t be afraid to demand solutions.