In 1936, F. Scott Fitzgerald wrote a 3-part column in Esquire magazine. In it, he claimed, "The test of a first-rate intelligence is the ability to hold two opposing ideas in mind at the same time and still retain the ability to function." If Fitzgerald were writing about health care today, he could have said much the same thing – if only to prove its impossibility.
In mid-July, Arthur J. Gallagher & Co. issued their second annual Benefits Strategy and Benchmarking Survey. Benefits advisors will note with little or no surprise that the two greatest concerns among respondents are (1) the need to control benefit costs while (2) attracting and retaining a competitive workforce. This is good news for benefit advisors.
When asked how they planned to deal with these twin challenges, the majority of employers (54 percent) indicated that they would increase employee plan contributions. Increasing deductibles (43 percent), out-of-pocket maximums (36 percent) and copayments (30 percent) rounded out the top findings. This is good news for benefit advisors.
Moreover, only 31 percent of employers surveyed have analyzed the economic effect of health care reform on their company. A mere 10 percent of employers have any kind of rewards program in place. In addition, they have not taken the time to review their benefits plans as they would any other corporate asset and, as such, they have no measurable objectives. This is good news for benefit advisors.
Employer's cognitive dissonance comes from knowing that they have a problem that must be addressed while simultaneously employing the same ineffective solutions on which they have relied – and which have let them down – for years. They need value-driven, 2014-style advice delivered via a multi-year benefits plan with defined and measurable outcomes. Focusing on this year's hot product or the lowest premium plan and worrying about it 11 months from now won't cut it.
A concurrent study by Health Care Service Corp. Research studied more than 316,000 individual Blue Cross and Blue Shield plans in Illinois, Montana, New Mexico, Oklahoma and Texas. The study found that employers migrating to a Consumer Directed Healthcare Plan (CDHP) realized cost savings in the first year; a trend that continued in subsequent years. An interesting component of the study's methodology is that those included in the sampling were not only those who had selected a CDHP over those who had not, but also those who had been enrolled in traditional plans and who subsequently switched to an HDHP.
