In every other aspect of business today, data transparency and data analytics are becoming the foundation of good management. Having access to good data is the key to:
- Better decision making
- Enablement of key strategic initiatives
- A better sense of risk and opportunity
- Better financial performance
If you are a baseball fan, you are probably very familiar with the trend, that even in sports, vast data analytics has become the basis for better managerial decisions.
Unfortunately, when it comes to fully-insured health insurance, the insurance companies share little or no data. This makes it impossible for employers to make smart decisions regarding their plans. There is little or no motivation for the insurance companies to take measures to halt the escalation of health claims because they continue to earn their profit margins on a larger and growing base (This is evident when you look at the stock performance for the publicly traded health insurers, they have all gained more than 100% over the last two years). This leaves most employers feeling they are stuck in a spiral or ever-increasing health insurance premiums.
What actions can an employer take if they have better data on what is driving their health insurance claims? Here are just two examples where, if you see heavy claims in these areas, you can do something about it:
- Standalone imaging facilities are three to eight times less expensive than an in-house hospital facility. Educating and encouraging employees to make better consumer decisions in choosing facilities can significantly reduce claims. Also, employees need to understand that they will pay 100% of that cost until they meet that deductible in that consumer-driven plan, so they have a vested interest.
- Urgent care facilities cost is usually a fraction of what a hospital emergency room charges. At open enrollment time make every effort to tell employees in the room to identify the nearest urgent care facility and to write it down on a note card and put it in the visor of their car. So they know at the moment of crisis where those places are and make decisions ahead of time.
With full and timely data on claims, employers can gain control and take actions to reduce health insurance claims and insurance cost. Without the data, you can just cross your fingers and hope your next health insurance renewal increase won’t break the bank.
Moving from a fully-insured plan to self-insurance is one way to gain full data transparency and to get analytical tools to monitor and understand your claims trends. Today, there are several options that allow even smaller employers with as little as 50 enrolled employees to realize the significant advantages of self-insuring with controls that assure you are not exposing your business to an unacceptable level of risk or volatility.
Information about the Author: Ed joined the team at Marsh & McLennan Agency, known locally as Insurance Associates in 2014. He began his career as an insurance industry specialist at Deloitte. In his twenty one years with an international insurance broker, Ed had several roles in Finance and Operations, the last being CEO of the Baltimore Office. He then joined the leadership team at a regional diversified financial services firm, helping to triple their revenues over his eight year tenure. At Marsh & McLennan Agency, known locally as Insurance Associates Company, Ed is leading our strategic growth initiatives, including sales, recruiting, and acquisitions. Ed has earned his Certified Public Accountant and Chartered Property & Casualty Underwriter designations.
Senior Vice President