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Friday, February 18, 2011

Our Benefits Direction

We're pretty much finished with this year's insurance renewal negotiations and, as expected, it was another brutally frustrating year. Our claims experience was outstanding yet again, with claims running between 80 and 90% of premiums. While that would normally mean a flat renewal (as underwriters have to project this trend out 15 - 16 months to reach the end of next plan year), this year it means another set of increases.

How could this be? Trust me when I say we've asked that question repeatedly for weeks. The answer lies in three places: (1) the general mess that is the state of American health care, (2) the lack of competition among insurance carriers, and (3) the unfunded mandates of the Health care Reform law. I'll save you my personal views on what's wrong with our health care system, other than to say that we spend a huge amount more than any other nation on earth and rank somewhere around 10th in life expectancy.

The lack of competition comes from the fact that the multi-state, fully-insured carrier market is down to Blue Cross in each state, Cigna, Aetna, and United Health care. At any one time whoever carries your policy is one, so you have a market of three; and they all watch each other. Present your renewal case to any one and the first question you'll get is, "What's everybody else doing." They won't admit to that because it would arguably violate anti-trust, but that's what happens.

This year we're already with the Blues, and Aetna is shaky financially. United Healthcare and Cigna, when shown Blue Cross' quote, declined to quote saying that they couldn't' undercut it enough to entice us to convert.

So as bad as our renewal ended up being, on top of that Healthcare Reform mandates will make up 5% of our total benefits cost for FY '12.

In order to give our people reasonable options we'll most likely implement the following changes:

1. The PPO, P-Network option, which is a Nashville-only network that includes HCA hospitals at a higher negotiated cost, will not continue into next year. This plan was costing us substantially more than the other plans and yet most of the utilization was in the S network (deeper discounted). It appears that most of chose this option just asked, "What's the best plan?" and didn't choose it for HCA access.

2. The PPO, S-Network will continue to be part of the plan, but the premiums will increase substantially. That's because this plan's cost is significantly more than High Deductible Plans, and if you choose this option it is just that you pay for what you choose.

3. The two High Deductible Plans will remain in the plan, and a new provider for our FSA and HSA cards will come on-line around April 1st.

Rates and specifics will come soon via internal emails and memos. For now it is important for all Nelson employees to understand two facts:

- That the Company is still paying the same proportion of your health care costs that is always has: the increase in cost is not from our shifting cost to our people.

- That the days of having any PPO option are probably numbered. We will probalby be an all-HDP medical plan by next April.

A major emphasis during Open Enrollment and all during FY '12 will be education about High Deductible Plans and Health Savings Accounts. Everyone should make plans to learn more about how these programs work. They really are good programs and can save you money if used correctly, or cost you if not. We've avoided making them our only options due to complexity, not because they are bad options.

More to come...

1 comment:

Mandy M. said...

Hi Mr. Jim-

Saw your post and was anxious to read how things were going to pan out this year.

This will be my third year on an HDP/HSA Plan, and I really like the fact I pay for services I use. I used to hate paying high premiums only to go to the doctor and see my insurance "benefit" was really just $10 after I paid my really high co-pay. If you need me to share my experiences with this, I'm happy to do so.