Employers often ask, “Why don’t my employees engage in health benefit programs set up at some cost to benefit the employees?”. The statistics on employee engagement (employees who use a program or service) are incredibly low. Engagement is often below 5%.
WHAT’S IN IT FOR THE EMPLOYEE
Employers that have reduced the cost of health benefits find that employee support for the savings initiatives are key to achieving large savings. Successful employers have discovered that there is a simple answer on how to achieve engagement and buy in. They share the savings with employees and work to improve and simplify the healthcare experience that is part of the new approach. When employees see savings hitting their pocket, quality improvements, and reduction of risk they become fans!
HOW MUCH INCENTIVE
Successful employers have found the sweet spot gives employees about 25% of the savings, retaining 75% to reduce the company’s cost. The employee savings come in the form of reducing co-pays, deductible amounts and reducing monthly employee premiums. Many plans have eliminated co-pays, and significantly reduced deductible amounts and monthly premiums. A good cost saving program eliminates health benefit cost increases for several years, which flows through to employee premiums.
NEVER TAKE ANYTHING AWAY
A mistake employers make when implementing a cost saving program is that employees lose benefits that they previously had, like being able to see the doctor they have used or having to go to a hospital that is further way for an acute procedure. The right way to approach this is to grandfather previous benefit options and make the employee pay for the difference in cost if they use the more expensive option. There is a sense of fairness in this approach and the number of employees embracing the savings program organically build to levels of 80 to 95%.
This is an issue with reference based pricing programs that radically change the providers the employees can use. While reference-based pricing is a great savings tool, the friction from disaffected employees makes this approach less than optimum in many cases.
EXPLAIN THE PLAN AND ENSURE ONGOING PERSONALIZED SUPPORT
Most employees do not fully understand the health benefit plan they currently have and implementing savings changes will cause more confusion. Health benefits can be complex and explaining different plan options is well beyond the single orientation meeting that most companies use. Successful savings programs invest the time to reach every employee and make them comfortable with changes and excited about managements concern for this important part of their life. Third party services like CareMoat working closely with the benefits consultant make this investment of time and attention and remove the burden from an already overloaded HR department.
NOT JUST A REDUCTION IN HEALTHCARE SPENDING
Most cost saving programs are measured on the reduction of health benefits spending. A utilization analysis of claims can be used to identify dollar reductions in spending. What is more difficult is to identify the real financial benefit of improved recruiting, retention, and increased productivity from a healthy and enthusiastic workforce. Well designed savings-focused benefit programs show from $1 to $4 of soft financial benefit for every $1 of health benefit expense saved.
A WELL-WORN PATH FOR A SMALL BUT GROWING NUMBER OF EMPLOYERS
The information provided in this short blog post is based on employers who achieved savings of 20%-40% in health benefit spending. Many of the employers work with 3rd parties like CareMoat who are a part of the Free Market Medical movement consisting of providers, patients, and self-funded employers, who believe that changing the way we purchase healthcare services is necessary and will result in substantial reductions in cost and substantial increases in quality and value.