August 07, 2012
An Ideal Health And Wellness Program
Based upon our actuarial analysis we find that as much as 75% - 85% of the potential savings from health and wellness programs can be directly attributed to six specific and objectively measured factors:
- Obesity (i.e., as measured by the BMI or Body Mass Index)
- Fasting blood sugar
- LDL cholesterol (i.e., bad cholesterol)
- Blood pressure
- Smoking/non-smoking, and
- Personal fitness
Ironically, all of them with the exception of smoking/non-smoking are directly related to Body Mass Index. As individuals solve their Body Mass Index problem, they gradually solve most of their other problems. Some individuals with genetic predisposition to certain conditions may require ongoing medications to keep one or more factors in control, but the vast portion of problems can be significantly improved and eliminated by eliminating obesity and achieving an ideal Body Mass Index or by at least improving it and moving closer to the ideal level.
This suggests that significant gains can be made by creating a BMI-focused health and wellness program. Since smoking/non-smoking is somewhat independent, perhaps a two pronged program (i.e., BMI and smoking cessation) is the best way to implement a program. This "tight" focus enables the program to quickly succeed, where other "loose" focus programs have failed or had significantly less results.
Although the actual results are significantly impacted by characteristics of the studied population (i.e., the population's average Body Mass Index scores and the proportions of smokers to non-smokers), we find that in a fairly typical population, overall health care costs can be reduced by as much as and possibly more than 20% - 30% if each of the individuals in an overall population advance to their ideal health status. On an individual by individual basis the cost reductions on some is much more than this. A tangential benefit of this improvement is that the cost savings continues to occur for many years, not cost savings in just one year.
This is Part 1 in a two-part series about what employers should expect from their insurance brokers. Part 2 in the series will be forthcoming soon.
Setting The Stage
The world of health care finance is changing and the role of the health insurance broker is changing just as rapidly. The role of a trusted advisor is more important than ever. Health benefits for any size employer demand a benefits professional who has the client's best interests at heart. Employers must explore current benefits offerings and demand a package best suited to their needs.
Voluntary benefits, self funding, and Consumer Directed Health Care are just a few of the many options every employer must discuss with their broker. Many employers are also demanding that their brokers account for their income.
The days where brokers were paid a commission by the carrier and counted on a regular double digit raise simply by telling the employer to re-enroll are gone. Some carriers are changing their compensation model. Instead of paying a percentage commission they are paying per head, also known as a capitation model. This model eliminates the automatic pay raise brokers have been experiencing and forces brokers to explore other options to replace lost revenue.
Employers should insist on a written agreement outlining the broker's commissions and the services they will receive. A good broker will help an employer design a plan, market the plan to carriers, and analyze the costs and benefits of suitable plans. Beyond that, some brokers may handle open enrollment, resolve billing and claim issues, and help communicate with employees, but it's essential to clarify such expectations up front.
If your company is self-insured or experienced-rated, retain a competitive broker group to periodically conduct an independent market pricing comparison. You will pay a consulting fee for such services, but the initiative may result in significant savings.
Discussions regarding containing health care costs have traditionally focused on educating and influencing the employee consumer of health insurance. But now, as soaring costs and growing complexity have become the norm, employers too need to educate themselves in order to understand how brokers are compensated and how they can reap the most value from the employer-broker relationship.