I manage healthcare benefits for the small company I work for, which means every year I get to try and figure out how to get the most bang for the buck in our healthcare benefits, despite the annual increases in our insurance premiums.
I sort of get to balance out the desire to make sure I get decent coverage, with the need to maintain the bottom line.
The longer I do this and the more helpless I get regarding having any control in beating back the inevitable rate hikes, the more I start getting into a "life boat" view of benefits: to keep high risk people of our plan is better for the rest of us.
I realized how much I've embraced the "life boat" view recently, when one of our employees said he had triplets. More below the fold.
Since we're a small company, with less than 75 people on our plan, we are very susceptible to a couple of scenarios, which will destroy any hope of not getting a huge increase: (1) a single catastrophic claim or (2) many hospitalizations for different non-catastrophic conditions.
When I found out someone had triplets the first thought I had was "triplets, fuck, I bet they're premature". Premature babies are among the most expensive costs in healthcare today.
The day after finding this out and before I got the babies information to get them enrolled on our plan, I met with our insurance broker. He showed me the claims for the past year were bad. The insurance company had paid out more money in claims, than we'd paid in premiums. The end result is a big rate hike, when we come up on renewal.
I could understand a spike in the past summer, since one of our staff had a brain tumor, which was removed. But other months had also trended higher than premiums.
The broker brought up an anecdote that another group had a premature baby, but the baby was only in the hospital a few days before being released, so the impact wasn't huge.
Our employee e-mailed me the names of his kids to enroll, with a note they will probably be in the hospital for 3 months. His wife delivered at 26 weeks.
Right now, I want to be pre-emptive and get rid of whatever coverage we have for fertility treatments, when the renewal comes up to limit us from getting hit with pre-mature multiple births in the future.
Other than my Machiavellian machinations about how to best limit coverage, since revenues are down, profits are down, and we're not at all in a position to get hit with a rate increase - we still pick up most of the cost of the premiums - I'd like to point out how totally helpless employers are in the current healthcare system we have.
Given our size, I can't get a detailed list of claims. We're too small to be self funded. I can get summaries of claims going up, but I don't know what's causing it.
Even aside from the catastrophic claim we had, with someone having a brain tumor removed, we've had several months of high usage in the past couple of years, which I guess are people using a lot of non-catastrophic hospital services.
One catastrophic claim can be mitigated a bit, since it isn't in line with the normal trend and doesn't reflect how our group's usage would normally trend.
So when we come up with renewal, I really can't do a lot, but tinker with raising the deductible (we're at a $1,000 per individual $2,000 per family), the co-pay (we're at $20 per office visit), maybe introducing co-insurance after the deductible and raising the amount of the premium we deduct from our paychecks, to off-set the increase in price we will get.
The broker told me to expect a 20-30% increase, at the least. Given the economy this isn't something the business can absorb.
To summarize, they're some interesting points with our for-profit healthcare system, which makes it a total mess.
Insurance companies are "gambling" in trying to predict how groups will trend, with regards to usage, so they don't always end up making a profit on all groups and will have to make up the losses somehow.
The cost of medical inflation creates a never ending increase in premiums, even if an individual group has a good year in claims and the insurance company makes money on the group. The insurer just assumes costs go up about 10% and jack up the rates no matter how the group performs.
Small companies do not have a large enough sample size for insurance companies to use their group claims as the major driver for figuring claims. They got grouped in with other sized groups and the overall trend is used to determine rates. This, I guess, may be effective to spread out risk across a larger pool, so bad claim years aren't going to wipe a business out, but you get no upside from having a good year.
Small businesses are too small to self insure, so there's a limit to what they can do to manage healthcare benefits.
For employers the current system's a burden and not something to use as an incentive to attract talent. The costs are going out of control and employers are better off making sure they don't get stuck with potentially high risk people - such as older workers - to destroy whatever benefits the rest of the group enjoys.
In the end our heatlhcare system's a losing battle for everyone. Change for changes sake isn't bad, since doing what we're doing isn't benefiting anyone.