WEBINAR WRAP-UP – July 23, 2020
Our own Dennis Hartin joined Roundstone‘s Steve Sullivan to discuss alternative funding for employee healthcare – plans for employers that offer more control over costs while still providing high quality care. While co-hosting a recent webinar titled, “Improve Your Health Plan and Lower Your Costs in 2020 & Beyond,” these two employee benefits experts explained efficient ways for small to mid-level businesses to achieve the same transparency and outcomes as you’d expect to find at a large “Fortune 500” company.
With the double-digit yearly increase of health insurance premiums, businesses feel forced to pass some of the cost onto their employees. In making these decision, a company may alleviate a financial burden somewhat, but the long-term impact limits a company’s ability to recruit and retain top talent in the job hiring market. But it doesn’t have to be this way. At Hartin Dynamics, we partner with medical companies to give business owners top-quality benefits at a reduced cost. Our team focuses on how they can not only help business owners, but also their employees by implementing the ‘group captive’ funding strategy.
Who’s Winning & Who’s Losing
Let’s be straight. The country’s largest insurance carriers are winning (we like to call them the BUCAAs), and small to mid-size businesses are losing.
Government reports say insurance rate increases hit double digits last year, while the cost of healthcare remained in line with inflation (less than 2%). Now let’s consider the rise in CEO salaries at the eight largest insurance carriers – their paychecks have more than doubled. That’s just not right.
We believe employers deserve a better alternative than what they typically face today.
Purchasing Healthcare Like a Large Employer
With the ‘group captive’ strategy, dozens of small to mid-size employer band together to achieve the same power as a Fortune 500 employer. They then can:
- group purchase insurance and all vendor services
- negotiate with networks or direct primary care providers
- gain visibility to claims information
- review plan cost-drivers using data analytics
- customize their plan to gain control over costs
- realize the benefits of high-variable plan costs
According the Steve Sullivan at Roundstone, the group captive strategy allows employers to retain profits on 80-85% of claim spend, compared to the ‘self-funding’ strategy where employer assumes 100% of claims volatility and ‘fully insured’ strategy where the insurance company keeps all profits. ‘Group captive’ allows employers to view their health plan with full transparency meaning they know what they’re getting when they purchase this specific plan.
Now, how does this strategy actually work? You can think of it as based on these three areas: Risk Taking, Risk Sharing, and Risk Shifting. Risk Taking represents the employers claim fund, which is about 60% of what they spend. Risk Sharing is the ‘captive’ where a pool of employers work together to take on the next layer of claims as they expand. Risk Shifting represents claims above $500,000 that the pool of employers is responsible for. Within the first two layers, the employer is able to keep whatever funds they didn’t spend instead of the insurance company claiming it.
We believe if your benefits plan saves money, it should come back to you. With the right level of transparency, employers that may be struggling with the high cost of healthcare insurance can go another route without being blindsided by increasing rates year-over-year. By implementing a group captive funding model, small to mid-level business are receiving the care they need at the right cost for them. Please watch the full webinar “Improve Your Health Plan and Lower Your Costs in 2020 & Beyond,”or ask us to share some specific scenarios with you so that you can see real world results. Getting started is easier than you might think.
