INCREASING YOUR HEALTHCARE ROI

Think about the percentage of your insured workforce that actually benefits from your healthcare investment and you’ll scratch your head trying to figure out why you’re committing so much money to benefit the 20% of them who are responsible for 80% of your cost and yet, at the end of the day you chalk it up to “that’s just the way it is” in healthcare.

It’s a commonly known fact that 20% of your insured employees are responsible for 80% of your healthcare cost and worse yet, the flip side of that coin says that 80% of your employees are benefiting from only 20% of your “investment.”

While it may sound like I’m parsing phrases, I’m not. I’m merely trying to draw you to the conclusion that “healthcare insurance is a poor investment” and it has been for a very long time, but even more so “in today’s new economy.”

Based on the 2005 Ohio Health Benefit Cost average of $7,395 per employee per year, a better way to illustrate this is; a company of 100 covered employees investing $739,500 per year is committing $591,600 of that investment inuring to the benefit of 20 employees and $147,900 inuring to the benefit of 80 employees.

In other words, 20 employees are receiving on average $29,580 each (per year) in tax-free benefits while the other 80 employees are receiving on average just $1,849 each (per year). Further, if your premium contribution percentage strategy is 50/50, then 80 of your employees are spending 200% more at $3,698 per year to receive an average annual benefit amount of $1,849 while the remaining 20 employees are receiving a 1,600% return on their $3,698 investment!

No other employee-benefit investment; like Dental, Vision and 401(k) as examples, share the same poor investment track record of health insurance and yet, nothing has changed to correct this over the past 25 years or so.

The question then is, why and, given the statistical nature of the group health insurance beast; “can you make your healthcare insurance investment more equitable across 100% of your insured population?”

While a simple answer does not exist, a long-term Defined Contribution Healthcare strategy may just be the solution you’re looking for that will not only assure 100% of your insured employees are adequately covered for their primary, basic and routine healthcare needs equally, but the 20% who are driving 80% of your cost remain adequately protected, but with less cost to the 80% who have historically “subsidized” the cost associated with the higher risk and utilization costs of the minority.

For a fresh new approach and innovative, non-conforming ideas on how I can save you money providing healthcare benefits to your employees and help you control your healthcare cost in the future, write: mark.capuano@skyinsure.com, or call me at 330-492-3373.

http://www.markcapuano.com. This article may be reprinted with Author’s email, phone number and web address included. Http://www.skyfi.com. Copyright © 2007, Mark L. Capuano. All rights reserved.