Hit or Myth? Debunking the Top 3 Group Health Insurance Myths
With big structural uncertainties making company health insurance premiums less predictable—and potentially more impactful—than at any time in recent memory, small and mid-sized companies are highly motivated to find popular and cost-effective alternatives.
Unfortunately, many executives and HR decision-makers at those firms feel trapped. They believe that they’re unable to compete with larger companies who can benefit from economies of scale, leverage, and an expanded range of options that are perceived to be unattainable to smaller and mid-sized organizations.
But is that perception based in truth?
The reality is that there are options that will enable smaller companies to access the insurance market with similar structural and financial advantages. Understanding what those options are and how they work begins with demystifying group health insurance, and cutting through the fog of misinformation and misperception to identify and clarify some of the biggest group health insurance myths.
Myth #1: “Smaller companies are at a disadvantage”
Enterprise-level organizations typically receive favorable group health insurance rates and benefits packages simply because of the numbers. The comparatively small percentage of unhealthy employees at a 5,000-employee company, for example, is unlikely to meaningfully impact the group rates that the rest of the company benefits from. A small group of unwell employees at a 40-person firm, however, makes up a proportionately larger faction that will have an outsized impact on company rates
If that’s true then why is the disadvantage of smaller companies a myth?
The answer: healthcare coalitions.
Healthcare collations aggregate a group of companies together to purchase insurance, while allowing them to remain independent as to plan selections and carriers. The result is a structure that confers the same cost and quality advantages enjoyed by larger companies, all while allowing companies to (in most cases) keep the plan they already have. A large purchasing pool and a shared common reinsurance market helps disperse risk, which means healthcare coalitions provide the bulk purchasing power, stability and predictability of a Fortune 500 program.
How does a healthcare coalition work?
- Each member company is underwritten and priced independently
- Premiums paid to the pool by each of its members, which becomes a loss fund
- Claims paid from the pool loss fund
- No one member is responsible for more than their own “risk” in the pool
Myth #2: “You can’t cut costs without sacrificing quality”
The best healthcare coalitions use the bulk buy theory to get clients from costly, fully insured “off- the-shelf-programs” to a customizable coalition alternative.
But what about quality?
Fortunately, cutting costs while maintaining or increasing the breadth of services and the quality of care is not a contradiction. Prospective members must complete a detailed feasibility study (covering company culture, employee health, wellbeing and productivity) to ensure eligibility, and that attention to detail doesn’t change once they have phased into full coalition membership. The best coalitions are diligent about gathering detailed data on quality of care, and provide members with a range of specialized tools, resources and financial incentives that simultaneously boost quality of care, improve outcomes, and keep costs low. Predictive analytics and workflow automation tools may allow care teams to intervene with the right patients at the right time in the right way. Some coalitions offer specialized support for high-risk patients, and program benefits may include features like wellness programs, population health management, and pharmacy carve-outs, and luxuries like onsite clinics and customized benefit enrollment platforms.
The result is healthier employees, fewer liabilities, and a lower price tag that includes a year-end refund for unused premiums.
Myth #3: When it comes to programs and policies, insurers have all the leverage
For small and mid-sized companies that have struggled to offer and fund quality health insurance programs for their teams, feeling powerless is an all-too-common complaint. It’s not unreasonable to feel like it’s about time the insured gain more influence over the insurer.
Coalitions give them that critical leverage in the healthcare market. Not only are the numbers now working in their favor, but partnering with a strong coalition allows members to benefit from negotiators working for better plans while members continue to make procurement decisions.
That leverage allows companies to benefit from:
- Direct contracting
- Bulk purchasing
- Refund of unused premiums
The bottom line is that coalitions offer an appealing alternative to traditional group health insurance options, allowing owners and operators of small and mid-sized businesses to better control their health plan costs and efficiently manage and mitigate the risks linked with providing employee benefits.
And that is anything but a myth.
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