If you talk to a benefits administrator or human resources professional, odds are theyre going to tell you theyre overwhelmed with trying to keep up with the pace of change and the demands of todays benefits landscape. It seems like just about everybody is, at best, treading water. Many will say they feel like they are out of control.
To a large degree, this turmoil is understandable, given the implementation of the Affordable Care Act, increased regulations, changing employee behaviors, and benefit cost pressures. However, just because a situation is understandable doesnt mean it should be acceptable. Its time for employers to stop chasing their tails. Its time to get proactive and stop reacting to the marketplace.
Here are the signs that will help you determine whether youre in pure reactive mode:
- Out-of-control renewal rates. When your renewal bids come in and theyre through the roof, thats a sure sign of a lack of planning. When the benefits environment gets frantic, employers tend to get surprises from their brokers. This isnt to point fingers of blame, but just to identify a symptom that things are out of control.
- Sky-high claims costs. This also falls under the category of surprises brought about by a lack of planning. When youre frantically trying to keep pace with industry change, its difficult to properly design a benefits program that fits your employee population. The result is often the wrong coverage for the wrong participant, leading to some major claims.
- Employees not understanding their plans and misusing benefits. If you think youre struggling to keep up with the pace of change, how do you think your employees feel? Its one thing for professionals who live and breathe health insurance to understand the landscape, and quite another for most employees, who only pay attention when they have to. If your communications arent positively impacting employee behavior in how they use their benefits, its likely because you arent able to focus on changing outcomes.
- Benefits administration issues. Too much to do, too little time to do it and too few resources.Enough said.
- Compliance misery. Understanding and addressing complexity is difficult when an employer feels overwhelmed and out of control. Employers that are in reactive mode tend to struggle keeping up with the often-moving compliance targets of the ACA.
Will the madness ever stop?
While Healthcare Reform may feel like were reliving the Wild West, its important to understand that changes in the market tend to be cyclical; every decade or so we are hit with a major change in healthcare and HR departments are often caught in the eye of the storm. For example, Health Maintenance Organizations and HMO-like institutions actually developed in the early 20th Century and evolved in fits and starts over decades until the 1973 enactment of the federal Health Maintenance Organization Act.
In the mid-1980s, it was the introduction of COBRA, which gave some employees the ability to continue health insurance coverage after leaving employment. In 1996, the Health Insurance Portability and Accountably Act required establishing national standards for electronic healthcare transactions; these reforms were phased in over the period of 2000-2003. The new century brought the Affordable Care Act and the subsequent scramble to get compliant amid the risk of fines and penalties.
This history lesson likely brings no comfort, especially now that everyone is in the ACA reactive mode. HR departments, benefits administrators and the businesses that employ them are too busy putting out fires and have little time to focus on bigger picture, course-changing concepts. Its easy to get lost in the fog of war with little time to strategically propel the business forward. But breaking this cycle matters because being more strategic about health insurance puts the employer back in the drivers seat. Or to coin another metaphor, no more tail wagging the dog.
Finding a path forward
Today, many organizations are looking at their health benefits plans as purely financial equations. This is far too simplistic. Yes, the financial piece of this conversation is critically important, but decisions should not be made based upon two-dimensional balance sheets. A strategic approach to the health and welfare of employees is closer to three-dimensional chess just because the numbers appear to add up does not make the purely financial decisions strategically sound.
For starters, employers cannot simply put blind faith in their brokers and consultants; they need to roll up their sleeves and understand how their plan was put together. They need to stop considering only the bottom line and gain an understanding of what drives costs, and also to honestly assess their risk. By doing this theyll empower themselves so that they can have an elevated conversation with their benefits advisors, and begin to bring a strategic approach to health insurance.
Here are the components of a strategic restart for gaining control of your benefits program:
Accept responsibility for where you are right now. This is not a finger-pointing exercise. Rather than bemoaning the current environment, or blaming some other part of the organization, its important to acknowledge the current reality.
- Strive to understand how you got where you are right now. Once the key players have agreed that the organization is going to be in control of its own destiny, its important to assess how you reached the present state. This should be an acknowledgment of external factors, but not a responsibility shifting. Organizations should ask themselves how did we react to those external factors, and why? Its important to understand company attitudes and what influenced decisions. For instance, employers need to consider how risk averse or accepting they are.
- Commit to getting and maintaining control. Once the landscape and history is better understood, commit to doing things a new way. If an employer is going to gain control over its benefits, it must raise expectations and work to gain more control of its destiny. That means, for example, no longer accepting renewal rate surprises. It means committing to performing due diligence in a timely way so that there arent any double-digit price increases 45 days ahead of renewal. Embrace an analytic approach, and always be evaluating. Just because a renewal occurs in January doesnt mean you have to wait until October to start thinking about it. This is often a multimillion dollar spend, and it needs to be well considered. Why shouldnt a renewal be a 12-month process?
- Identify, understand and manage the key components of the benefits strategy. Your strategy will fall into several buckets, such as compliance, communications, wellness, the economics of the plan. Mapping the interplay between these buckets is critically important. For instance, a tweak in how you approach compliance can have repercussions across the other aspects of your strategy.
The time to get back in front of health benefits and approach them in a more strategic fashion is now. To do this requires an organization to step back and assess where its at and where it wants to go. Health benefits can be a strategic advantage for an employer in a number of ways. But that will never happen if youre in reactive mode.
Robert Stumper is senior benefits consultant with Corporate Synergies.
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