We recently sat down with Steve Saucier, President of Cambria Benefits Group in Tampa.  He is a 25 year veteran of the employee benefits industry.  We asked him his thoughts about the current state of the medical insurance industry and the national health care reform package.

Question:  What is your perspective on health care reform?

Answer:  The health care reform bill will continue to roll out over the next few years.  As we speak, the interim regulations are still being finalized for the near-term changes that will take place.  It’s important that employers stay on top of these interim regulations as they will provide insight into what they must do to comply with the new requirements.  Plans will need to decide whether they want to retain “grandfather” status, meaning they won’t have to comply with all of the changes, or lose their grandfather status and opt in to all the changes.  This is a case by case evaluation and decision.

We would have liked to have seen more effort put forth on cost containment strategies than what we ended up with.  Medical plan costs continue to spiral out of control for many employer groups.  Double digit medical trends still pervade our system.  There are many moving parts and there is no one right magic solution.

There are beneficial components to the health care bill.   But if I look back on what I learned in my economics classes in college, I never remember a professor telling us that if demand went up and supply went down, that prices would go down.  We should have worked on the supply (of medical providers) and the cost of services first before we rushed to improve access.  That would have made better sense.  Then, we could have offered people better value for their money.

Question: What are you advising your clients to do in light of these increases?

Answer:  For the last 25 years, we have been through the advent of managed care, disease management, wellness efforts and torrential cost shifting back to employees and their families.  While all these strategies have been necessary to create a manageable plan, most CFO’s we speak with want to see Return on Investment scenarios for these programs.  Sometimes, particularly with wellness programs, the ROI calculations can be very nebulous, especially if high employee turnover is present.  By the time you start to get an employee indoctrinated in the “wellness culture” you are trying to create, they are out the door and on to another workplace.

We aren’t saying these programs don’t deserve merit.  We implement wellness programs with employers all the time.  If there is a commitment from the senior management group, they can be very effective.  What we are saying is that if you are counting on wellness programs alone to solve your health care dilemma, you are probably going to be disappointed.

Question:  What else can employers do to continue to offer competitive benefit programs while still keeping an eye on the costs?

Good question.  It’s one that we, along with our clients, have struggled with for many years.  We believe that a wholesale change needs to take place in the way we educate our client’s employees and their families on how medical services should be consumed.   In this society, for most big ticket items, people will do research on quality and cost before they pull the trigger and lay their hard earned money down.  For some reason, our society has never really managed to get this buying behavior transferred over to the purchase of medical services.   A lot of it has to do with the fact that historically, at least for the last 30 years or so, we went to a system of small co-payments for medical services.  Employees did not have to worry about anything other than whether they could afford the co-payment.   Now, with employers having to increase deductibles, coinsurance and out of pockets to extreme levels, the employees are more cognizant of the effect on their pocket books.  So that part is working.  No better way to get people to pay attention to what their spending that when you have them putting some skin in the game. But the problem as we see it is that employers have no way of insuring that their employees will get to the best medical providers, let alone at a competitive price.

It would be great if health care were affordable and we could continue to offer low co-payment type plans to employees.  That would make our jobs at open enrollment a lot easier.   But the simple fact is that employers agonize over how to deal with relentless double digit rate increases year after year.  They really haven’t had a choice.

What we believe is missing are dynamic support tools for employees and their families to help them in their health care consumption.  You can keep raising deductibles and out of pocket costs, but eventually your workforce will get so financially stressed out that it will start to affect their performance.  We call that “presenteeism.”  They are at work but just not as engaged as you would like them to be.

The tools we advocate take as much work out of it as possible.  I recently spoke with a friend who needed a colonoscopy.  He wanted to know how much it would cost since he had a $5,000 deductible.  I described the type of information we would need to collect in order to determine his share of the cost.  At the end of my description, he said, “Man, that sounds like a lot of work!”  And even though my friend was asking about a relatively simple procedure, he quickly learned that the charges for it vary widely depending upon where you go and who does it.  Yet, just a week earlier he had purchased a $2,000 plasma TV that he says he researched for 3 weeks before he made a decision.  He said he saved around $300 by doing his research.  So I said to him, “ Let me understand this.  You were willing to spend 3 weeks to save $300 but you aren’t willing to spend 15 minutes to save maybe $3,000?”  He asked how I came up with the $3,000.  Well, in Tampa Bay, depending upon where you go and who does the colonoscopy, the prices range from $1200 to $4200 even inside the preferred network of providers that most employers offer.  The trouble is, people don’t have this information so that can’t make good decisions.  If an employer has its employees and their dependents running around accessing care without any guidance whatsoever, mistakes are going to be made.  People end up going to high cost providers over and over.   Will employees and their families take the time to research 50 or 60 possible provider options and the pricing for each?  We don’t think so.  They need someone to take the drudgery out of the process.  If employers make it easy for employees to get this information (and provide incentives for them to do it) then all of a sudden we start moving to an “informed consumer” environment and that’s the direction we want to move in.

Question:  I can see why you would want to have your client’s employees going to the lowest cost providers because that would mean the plan would pay less, but what about quality?  Shouldn’t that be part of all of this?

Absolutely.  In fact, we tell clients all the time that they should never advocate price over quality.  The sad fact is that America is ranked around 36th or 37th in the world when it comes to medical outcomes.  That should tell us right there that we don’t live in a perfect country where all the surgeons are equally skilled, facilities are equally competent or that outcomes are anywhere near consistent.  Some hospitals are 100% committed to getting and keeping their employees highly trained.   Unfortunately, we do have some facilities that experience financial problems from time to time and training budgets get downsized along with everything else.   If I were to share with you the outcome differences among hospital facilities in the state of Florida for the same procedures, you would question whether the ones performing at the bottom should even have a license to do that procedure.  It’s really quite scary.  The mortality rates of some facilities for some procedures is abysmal when compared to others.  So, it doesn’t do any good for us to send folks to low priced providers if we can’t reasonably expect them to have a good outcome and get back to work.  We say employers should help their employees with these decisions.  Put the right resources in place so that it becomes a simple task for the employee or family member to quickly obtain this information and make an informed decision.  It takes a lot of research to gather all this data. Experts need to interpret it.  On an ongoing basis, provider pricing has to be kept up to date.  Outcome statistics change over time.   People need to see the medical scorecards of potential providers to make these decisions.  And, if we can locate a provider or providers with the very best outcome statistics for a given procedure and they happen to be charging the lowest (or one of the lowest) charges, then everybody wins. In fact, we find that in the vast majority of cases, the providers producing the best outcomes indeed charge in the lower cost ranges.   The employee pays less out of their pocket, put the odds in their favor for having a better outcome and  the employer reduces their claims costs to boot.  I can’t think of a better strategy to reduce costs and improve the lives of employees than arming them with this type of information.  We all know that knowledge is power and it certainly holds true here.

The funny thing is, once these types of support tools are put in place, employers can start to see measurable reductions in their loss ratios and paid claims.  It makes a lot of sense.

Question:  How much does an employer group have to spend to get these kinds of resources available to their employees?

Anything of value is going to cost money, and this is no exception.  In most situations, we provide these support services at no extra cost to our clients.  Occasionally, we must ask our clients to participate in the cost but we try to avoid that if possible.  It becomes part of our total value proposition to the client.

Question:  If employers want more information on how this works, how can they do that?

Answer:  We are happy to answer any questions they might have.   Our website is www.cambriabenefits.com and our toll-free number is 888-532-9998.

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