Is Your Health Plan Healthy?
by John Ahrens
February 2008

Most of you reading this newsletter aren’t health actuaries, but having health "insurance" is important to all of us. Although a few of you may have individual policies, most of us have coverage through our employer. The question you should ask is how well does your employer manage your health coverage? You could ask the questions below and find out if your employer is managing your program or riding the cost wave.

IS THERE A GAME PLAN?
Have actuaries reviewed current plan options and rating parameters? You’d be amazed how easily actuarial equity can be lost when non-actuaries are pricing plan options and employee contributions.

Is there a long term financial strategy with constraints measured as a percent of salaries, or per total employees (not just those covered)? Such measurements should go back at least ten years and forward five years to provide perspective. This review should also document all changes in the parties involved (staff, administrators, consultants, plan design and contributions) since more changes occur than many realize with only short term views.

Is there a game plan related to politics, including contingency planning? What changes, if any, does your employer want to see legislatively that could impact the health plan? Has the employer communicated these thoughts to employees, industry associations, regulators and elected officials?

IS COST / BENEFIT ANALYSIS APPLIED?
Are outside, independent reviews of plan partners (administrators, especially case management and wellness vendors, and brokers/consultants) performed? If so, who are the findings shared with and what was the result?

Are key cost drivers captured, measured and benchmarked? Does your plan summarize results or dictate reporting formats or just take whatever is provided by others? It’s much more difficult to get meaningful summary data than you’d think.

Are benefit strategies analyzed for their impact on participants’ utilization of services, ability to share costs and tax efficiency?

ARE PLAN PARTICIPANTS ENGAGED?
What’s the mix of plan participants and costs between employees, spouses and children? How much employee turnover and dependent changes occur?

How is the employer trying to encourage healthy behavior changes? Is the approach effective in reaching participants most at risk?

How much communication is there with plan participants (covered employees and their covered dependents)? Only at enrollment and when there are plan changes, or throughout the plan year? Does plan management seek and get real participant feedback before implementing changes?

CLOSING THOUGHTS
Although almost every employer’s situation is unique, there are certain common approaches and behaviors that I believe need to be recognized to have a well managed benefit plan.

Maximize the value of your consultants (or broker). Remember, their goal is to maximize revenue from you. They are most useful for independent observations, industry insights and special analysis tools. They are most expensive at manipulating data, producing reports and summarizing alternatives that the employer could be doing themself.

Make sure all vendors are evaluated periodically and held accountable to their promises, especially in wellness initiatives.

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