Do Your Employees Know You’re Self-Insured?

According to the 2018 Annual Report to Congress on Self-insured Group Health Plans, over 56,000 organizations are self-insured. Yet ask the employees at any company and fewer than one percent of them are aware of this. Among executives, it’s not much better. In our anecdotal surveys, less than five percent of executives know their company is self-insured.

Self-insuring has steadily grown over the decades. Today, 80% of employers with 200 or more employees are self-insured. Many smaller companies are self-insured too, however, only the largest employers take advantage of what it means to be self-insured.

There are a few reasons to self-insure. First is simple risk and reward. By taking on more of the risk, employers stand to gain by not having to pay a third-party to bear the risk. Second, the real promise of self-insuring is the ability to take control of healthcare expenditures. This often means negotiating directly with healthcare providers. But there’s another aspect of self-insuring that’s being totally neglected, and that is the ability to educate and empower employees to save the company money. Yet as we said earlier, fewer than 1% of employees or 5% of executives even know their company is self-insured. This lack of awareness is mindboggling.

Many people carry a card in their wallet that says Blue Cross, or United, or CIGNA, or Aetna (known as the BUCAs). If these people work for one of the more than 56,000 organizations that self-insure, they don’t know it. They believe there’s an “insurance company” paying the bill. But that’s simply not the case. Instead, it’s their employer that’s footing the bill. All the BUCA is doing is providing administrative services (claims processing) and leasing out their network (their negotiated prices). Some would also say their job is to make the lives of the employees miserable by denying claims, imposing useless pre-authorization processes, and making it impossible to figure out the cost of anything until after the fact.

When an employee believes an insurance company is paying the bill, how motivated will they be to save money? But when they know their employer is paying the bill, then they also understand that a dollar saved on healthcare is the same as a dollar saved on office supplies, or travel expenses, or electrical power to run a factory. A dollar saved is a dollar more available for bonuses, salary increases, or an increase in the value of the company’s stock. For a company trading at ten-times earnings, a dollar saved is worth ten dollars of market capitalization. Yet companies do nothing to educate their people on the fact that they are self-insuring.

Walk into any safety conscious American company and you’ll see a sign that says, “X days since our last lost-time accident.” You’ll see signs that say, “Remember to wear your safety glasses,” and “Safety First.” But there’s no sign that says, “Unnecessary Emergency Room Visits are up 20% this year,” or “We budgeted $50 million dollars for healthcare this year, it’s only October and we‘ve already spent $48 million dollars.” Why isn’t this information shared with employees?

Conventional wisdom is that employees don’t care. At Amaze, we don’t believe it. We think this is a highly cynical view that gives employees far too little credit. In good companies, employees fret every dollar spent because they understand the benefit of saving the company money. Frugality in business tends to be cultural in nature. It works when it comes to healthcare spending, too.

Think about how great companies invest in culture building. Think about the safety culture at Dupont, one of the best in the world. Think about the custom-centric culture at Zappos. Then think about what a culture dedicated to managing healthcare spending could do for a company. Why don’t companies do it?

Many companies try to attack the problem indirectly. Billions have been invested in wellness programs over the past two decades. Yet the data suggests wellness programs don’t work. The reasons are obvious. Wellness programs are about behavior modification, often offered without taking an individual employee’s preferences, goals or style taken into consideration. Wellness programs assume that we should all go to the gym, or that we should all alter our diets. They’re generally implemented as an extension of the company’s benefits program, not as a core competency. Wellness is not built into the culture. And, people aren’t usually told the true reason their company has invested in wellness: to save money, because the wellness program provider or consultant has sold them on how they’ll reduce healthcare spending by helping people lose weight, or stop smoking, or exercise more to avoid diabetes. Employees are smarter than that.

When educating people on the financial nature of self-insurance, companies are being intellectually honest with their employees: it’s about the money. But they are also empowering people to become better at managing their own healthcare to save the company money. This has a significant advantage over wellness programs because it means people are managing things themselves—on their own terms, in partnership with their own medical providers, based on their individual goals and preferences.

For many companies, healthcare spending is as much as 20% of the payroll, sometimes more. Healthcare ranks in the top five line items on the income statement for many. Yet little is done to actively manage it. The time has come for companies to truly embrace what it means to be self-insured. It’s time to treat healthcare as a vital part of the supply chain. Doing so means empowering employees and their families with knowledge, information, self-confidence and support. It means empowering them to make better decisions about their health and their healthcare. The payback is immense, not only financially, but in the form of reduced stress for employees who have felt helpless in the face of a complex and confusing medical system and increased loyalty from employees who realize their companies really care about them.  It’s an approach that is a win for everyone.

At Amaze, we provide a comprehensive solution that starts with employee education, provides them with the mobile technology they need to connect to a comprehensive set of support services including live telemedicine and non-medical advisors, and that helps them grow as people and patients.

We all enter this world as a patient. We find ourselves in the role of patient many times over the course of our lives. And if we’re lucky enough to live a long life, we generally leave this world as patients, too. Many of us also have children and aging parents, and others we’ll care for at some point. Over the course of our lives, between ourselves and our employers, we often spend as much on healthcare as we spend on rent or the mortgage, sometimes more. In retirement, it’s estimated that we’ll spend 50% of our social security checks on healthcare not covered by Medicare (supplement premiums, co-insurance, things not covered at all). In other words, effectively managing healthcare is a life skill with enormous benefit. It’s time to start accepting the importance of empowering people to manage their own healthcare and it starts with self-insured employers who, beyond the patients themselves, have the most to gain.

 

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