Strip away all the emotions tied up in employee benefits, all the partisan griping and name calling about healthcare reform, wipe away the employees’ sense of entitlement, get rid of the talk about Obamacare and what it all boils to down to is . . . insurance. In this country, we have gotten so wrapped up in the corporate “welfare system” called employee benefits that we believe every runny nose should be covered by company-paid medical plans. We take it as a given that our employee benefits will insulate us from the costs of every small health issue we have. We pay a high price for this entitlement, but because we don’t actually see the cost, or see it indirectly as a payroll deduction out of each paycheck, we don’t actually know what we’re buying.
But the fact is, benefits are just insurance. And the definition of insurance is “a promise of compensation for specific potential future losses in exchange for a periodic payment. Insurance is designed to protect the financial well-being of an individual . . . in the case of significant and unexpected loss.” Notice something here? Nowhere does this definition mention coverage levels or treatments. It is silent on the subject of co-pays, out-of-pocket maximums, and prescription formularies. Insurance, and by extension benefits, is all about money, full stop. The purpose in buying any insurance is to protect your income and your savings should something major and unforeseen come up.
Think about your car insurance. You’re not insuring your tires, or your oil, or your headlights. You expect to buy new tires periodically, and honestly a set of tires today can cost about as much as the MRI your doctor wants you to have. So, why don’t we put in a claim against our automobile policy to cover our tires? Or, how about an oil change at Jiffy Lube? It costs about as much as a visit to the doctor’s office, but we don’t expect our car insurance to pay for it. Even when we have a minor accident and knock out a headlight, most people will opt to not involve the insurance company and will pay for it out of their own pocket. But on that dark night when the deer leaps out of the ditch and into our headlight, when we can’t swerve around her, when we do major damage to our car, we expect the insurance to cover the repairs . . . after the deductible, of course. And why do we make these decisions? Because we know what car insurance is for . . . the unexpected and expensive. We want to control the cost of that insurance; we’re spending our own money for it and we don’t want our rates to go up.
In employee benefits, until now, it has worked completely differently. Because we aren’t laying out our own money for treatments, we accept doctors’ recommendations without questioning them and with no concern for cost. We avoid the stress of having to pay attention to the dollars, shop for the best deals and make decisions. This system leads us to over-consume health care services and make extravagant use of services that have high costs and low benefits. If we had individual insurance, instead of group insurance through our company, and we had to pay the full costs of treatments, we would think we were buying a Maserati . . . the sticker shock would send us reeling. Until now, employers have been funding this high performance sport car called group insurance and they are feeling the pinch.
The problem is that it is not sustainable. It is inefficient.
The solution is two-fold: cost transparency so that employees, as benefits consumers, know what they’re actually paying for the insurance and treatments; and benefits plans that act like insurance – not entitlement programs. When they know what things actually costs and they are covering it with their own money, employees make better decisions about how their healthcare dollars are spent and their actions will drive costs out of the system. When they understand the role of health insurance to cover them for significant, unexpected medical situation, they will use the insurance to protect their income and their savings. A Consumer Driven Healthcare Plan is just that kind of insurance. These plans have lower premiums at various price points balanced against higher deductibles so that, like car insurance, employees can decide how much of their own money is “in play” before the insurance kicks in.
The Bright Choices® Benefits Exchange™ available through the Buffalo Niagara Partnership is based on these basic ideas. Full cost transparency . . . the cost of the insurance is published to each participant. A selection of Consumer Driven Healthcare Plans . . . participants can find the right mix of premium and deductible. Income protection . . . the Benefits Exchange helps employees select plans that protect their financial well-being and cover them against significant loss, at a price they can afford. All employee benefits are about money. After all, it’s insurance.
Guest Blog: This blog post was written by Buffalo Niagara Partnership Vice President Fred Bristol.
