The first issue is a practical look at
how health care trend is financed.
The example below illustrates the point.
Division Revenue = $500M
Profit Margin = 10%
Earnings = $50M
Employees = 2,000
Members = 5,000
Health Care Cost = $24M
Health Care Trend = 8.33%
Health Care Increase = $2.0M
$20M Sales is Equivalent to $2M Trend
How many new customers?
How many new sales calls?
This is an annually compounding event
and is the reason it must be managed.
Is the Baseline Too High?
Time to Recalibrate?
The second issue is the frustration
experienced with the annual insurance
cycles and perceived lack of control.
The perplexity for many is with the
annual cycle; the perception that there
is an artificial
anchor and settlement process
in the insurance industry.
In addition, it is not all that clear to the buyer how to identify and deconstruct the various profit sanctuaries and to
have them rebalanced in your favor.
It is also important to know whether the processes have embedded conflicts of interest from a transactional approach.
The key point is where excess costs for assumed risks are eliminated and gains for the risks transferred are realized.
The third issue is how to keep both the employee and the employer engaged
in cost control within the "dead zones".
Employee Deductible = $1,300
Employee Coinsurance % = 80%
Employee OOP Limit = $6,550
When a claim exceeds $27,550,
what is the incentive for the employee
to control costs as the benefit is 100%?
Plan Maximum = Unlimited
Employer Stop Loss = $150,000
When a claim exceeds $150,000,
what is the incentive to control costs
when reimbursement is 100%?
This is integrated into the plan design and degree of ownership perspective.
The fourth issue is the measurement
of actual dollar savings attributable
to a corporate wellness program.
According IBIS World, the corporate wellness industry is $7.8B revenue at
an annual growth rate of 7.8% to 2021.
RAND conducted a Wellness Programs Study of 600,000 employees at seven employers and one Fortune 100 employer with 10 years of data and reported that the wellness programs
are having little if any immediate effect on the amount employers spend on health care.
The overall ROI was $1.50 : $1.00, with lifestyle at $.50 : $1.00 and disease management at $3.80 : $1.00. Is your disease management $3.80 : $1.00?