Healthcare Costs on the Run
From March 2005
Community Comments
Spark a community dialogue. Be the first to contribute by adding your comments.
Partially self-funded plans provide flexibility and savings potential, says Michael Mulqueeney, partner, Wellspring Benefits Consulting, a Walnut Creek company with an office in Sacramento.
“Typically, how the employer has maintained and managed healthcare costs has been to either do plan-design changes that are going to reduce premiums but will create more of an expense to his employees, or to leave the plan design the same, but say, for example, ‘This year, instead of covering 80 percent of the premium on your behalf, we’re going to only be able to cover 75 percent.’”
Shifting the cost burden to the employee may save the company money, but as Musallam points out, such a move doesn’t resolve the problem and can make for unhappy employees. In other words, it’s a solution, but not necessarily the best or only one.
Mulqueeney says he’s been successful in cutting costs for mid- to large-sized companies through custom-designed, partially self-funded plans — in which the employer pays the healthcare bills, often through a third-party administrator, but reinsures for high-dollar amount claims or a large aggregated monthly claims total) to limit the company’s liability.
The centerpiece of these plans is data collection and evaluation through software tools, which allows Mulqueeney and his clients to review detailed aggregated claims data, broken out a number of ways, for a group. (Use of aggregated data — which doesn’t include any information by which an individual group member can be identified — is Health Insurance Portability and Accountability Act-compliant. HIPAA is a federal regulation specifying how and by whom an individual’s medical records can be used.)
The analysis can help pinpoint problem utilization areas — where an employer is spending too much money — and help employers devise strategies for fixing them.
Savings Opportunity
Because roughly 80 percent of the healthcare dollar is spent on claims (the other 20 percent is spent on fixed administrative costs), the greatest opportunity for savings is on that side of the house.
Continued...
“Typically, how the employer has maintained and managed healthcare costs has been to either do plan-design changes that are going to reduce premiums but will create more of an expense to his employees, or to leave the plan design the same, but say, for example, ‘This year, instead of covering 80 percent of the premium on your behalf, we’re going to only be able to cover 75 percent.’”
Shifting the cost burden to the employee may save the company money, but as Musallam points out, such a move doesn’t resolve the problem and can make for unhappy employees. In other words, it’s a solution, but not necessarily the best or only one.
Mulqueeney says he’s been successful in cutting costs for mid- to large-sized companies through custom-designed, partially self-funded plans — in which the employer pays the healthcare bills, often through a third-party administrator, but reinsures for high-dollar amount claims or a large aggregated monthly claims total) to limit the company’s liability.
The centerpiece of these plans is data collection and evaluation through software tools, which allows Mulqueeney and his clients to review detailed aggregated claims data, broken out a number of ways, for a group. (Use of aggregated data — which doesn’t include any information by which an individual group member can be identified — is Health Insurance Portability and Accountability Act-compliant. HIPAA is a federal regulation specifying how and by whom an individual’s medical records can be used.)
The analysis can help pinpoint problem utilization areas — where an employer is spending too much money — and help employers devise strategies for fixing them.
Savings Opportunity
Because roughly 80 percent of the healthcare dollar is spent on claims (the other 20 percent is spent on fixed administrative costs), the greatest opportunity for savings is on that side of the house.
Continued...
The Magazine
Site Links
Prosper Plus +
- Get Prosper Plus to receive e-mail alerts, special event invites, and content that interests you.
Community
- Join the Community and start participating. It's fast. It's easy. It's free.
Advertise on this site! Show your support for the Prosper Network and reach influential thought leaders and web users like yourself. Contact us to find out how.
© 2004-2007 Prosper Media, LLC. All Rights Reserved. Terms of Use | Privacy Policy
The materials on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of Prosper Media, LLC.
Community Comments