Royal Oak, MI 48067

Everyone Into the Pool

Everyone Into the Pool

reinsurance pool

Insurance premium increases may have dodged a bullet for 2021, now that rates have been released, but what may happen to benefit rates in 2022 have experts divided. We are expecting that rates will rise in 2022 when the repercussions from COVID-19 start to wind down and insurance companies can take stock of their losses. 2021 is seeing on average a 3.6% cost increase, but what increases are in store for us in 2022 remain to be seen.

Needless to say, the consequences for most organizations of any substantive increase would be problematic, and possibly unsustainable. Which is why there has never been a better time to get out ahead of the market by finding smart and strategic ways to control cost increases and save on health care.

That might sound easier said, than done, but there are options: proactive steps companies can take to reduce health care costs, boost their bottom lines, and protect themselves against steep increases at a time of unusual volatility and unpredictability in the health care marketplace.

Exhibit self-control

With standard, fully-funded benefit plans, pre-determined premiums are set and insurers take on the majority of the financial risk and claim management responsibilities. The down-side is that employers have little-to-no control over increasing costs.

Moving to a self-funded platform can look like an attractive option for some, particularly companies where employees tend to be fairly healthy and the health care plan is not fully utilized. Self-funded plans afford more control over plan design and funding, ultimately saving money in many cases.

Stick together

While employers can benefit from a self-funded approach, they also take on more financial risks. Reinsurance or “stop-loss” insurance can mitigate those risks, but also incur an additional cost and may eat into some of the savings. Which is why an increasingly popular option for companies of 50-1000 employees is to join a health care coalition.

In many respects, health care coalitions offer the best of both worlds: the control and cost savings of a traditional benefit plan, and the stability and security that is sometimes lacking in some types of self-funded plans. They make this work by using a combination of strategies to reduce health care costs, and by leveraging the power of large groups while retaining individual decision-making and autonomy.

Seek safety in numbers

Health care coalitions confer bulk purchasing power, stability and predictability to member institutions that would otherwise be unable to access those benefits. A large purchasing pool which shares a common reinsurance market helps disperse risk, dropping the chances of a bad claims year to under 1%.

For companies considering a health care collation, it’s appealing to have the ability to aggregate together for insurance purchase, while remaining independent with regard to their plan selections and carriers. In other words: in many cases, companies can keep the plan they already have.

This only works because all prospective members must participate in a detailed feasibility study (encompassing things like company culture, employee health, wellbeing and productivity) to determine their eligibility to join. New members follow a graduated predetermined track to phase them into full membership.

Take a multi-pronged approach to savings

In a health care coalition, employers find new ways to cut health care costs, engaging employees as newly empowered advocates for their own physical, mental and financial health and wellbeing.

Members also have access to a wide range of specialized tools and resources at a reduced cost, including things like wellness programs and population health management, pharmacy carve-outs, onsite clinics, and customized benefit enrollment platforms. In many cases, the result of this cost-cutting is a reduction in the estimated annual pooled premium usage, and a year-end refund for unused premiums. At a time when many companies are struggling to keep health care and benefits costs from skyrocketing, these are strategies that can leave your team healthier, limit your liabilities, and, remarkably, actually reduce your health care spend.

Join our live event, “A Real Solution to Reduce and Control your Health Care Costs” to find out why this works: Register for Live Event

You can learn more about our Health Care Coalition with our standout highlights and a look at the numbers here: Learn More About the Coalition