Why brokers can – and should – support health equity
With inflation rampant in the U.S., American businesses need to step up and provide better and more affordable health care to all employees. Brokers can help.
Rising costs of labor and supplies are driving health care pricing increases, a trend that was predicated in 2021 and remains true in 2022. Rather than rethinking their health care offerings, many employers are passing along these rising costs to employees. While those with higher income salaries may be able to better absorb these costs, the same cannot be said for lower-income or middle-class employees. These workers, many of whom are paid hourly, are seeing their paycheck chewed up by rising costs, making it difficult for them to cover basic necessities like food, housing and childcare.
Options are limited for the majority of working Americans who get their health insurance through their employer. High deductible health plans (HDHPs) and preferred provider organization (PPO) plans are hallmarked by high premiums and deductibles, hidden and unpredictable out-of-pocket expenses, minimal support, and lack of transparency to understand utilization and cost drivers. For workers on these types of plans, even the slightest rise in their costs could mean choosing between food and a life-saving prescription medication or much-needed doctor visit. Today, many employees choose to either skip treatment or forgo health care benefits entirely to save money. And those who decide to move forward often find themselves in debt without the means to escape easily.
However, smart employers are stepping up to the challenge and making decisive moves that guard employees from taking on more cost. Savvy employers know that offering affordable benefits is key to attracting and retaining talent, and they want to reduce the burden for the most vulnerable.
An increasingly popular solution is reference-based pricing (RBP). Unlike traditional PPOs, which focus on the chargemaster rate listed by the provider, RBP focuses on the actual cost of services or a benchmark like Medicare plus a reasonable profit. As an added benefit, the best RBP vendors will handle communication with providers when balance bills occur, so all the employee needs to do is provide any information needed for resolution. At a time when employers are eagerly searching for cost-savings, many who make the switch to RBP are seeing a 15% to 30% reduction in annual health care spending.
As they start to look at next year’s health plan offerings, it’s important for benefits advisors to understand their clients’ employee populations and how a rate increase could impact them. For example, taking on more health care costs could result in medical debt or long-term health issues for employees who aren’t able to receive affordable preventative care. In addition, they must consider all the current challenges their clients are facing. Remember, while it is a cause for concern, inflation is not the only factor at play. Businesses are also facing recruitment obstacles, largely due to employees no longer viewing health plans that force them to share costs as a perk of the job.
Employers, with the help of brokers, have the power to alleviate employees’ worries that one doctor or ER visit will break the bank. Implementing a change like switching to RBP helps attract and retain talent with more affordable plans, allows employees to save money and access more affordable care, and supports the ongoing efforts to ensure health equity for all Americans.
Steve Kelly is a recognized expert in the insurance, employee benefits and risk management industries. He is currently the Chairman and co-founder of Imagine360, the leading provider of employer-sponsored health plan solutions that deliver deep cost savings and concierge member support.