Wharton Advisors provide an analysis that encompasses five basic, yet major, issues that affect healthcare plan expenses.
1. PLATFORM & CARRIER SELECTION
What carrier is best for your group as a whole?
We at Wharton have clients across the country. This diverse pool of clientele has allowed us to thoroughly analyze the true Rate of Payment for each platform. Discounts etc., while often considered major deciding factors, are really just smokescreens.
The truly vital piece of the puzzle is the amount that is paid out per contract by the carrier.
Our analysis will utilize that concept to demonstrate the maximum bang for your buck in claims adjudication.
2. PLAN STRUCTURE
What plan design is best for your group as a whole?
This encompasses the tiers of coverage and their corresponding costs for the employer/employee. Traditionally, we find that that structure of our clients fully insured plans are incorrect. More often than not, this causes an excess claims burden to fall upon the employer.
This misunderstanding of plan structure, and subsequent mispricing of the tiers, leads to the third issue.
3. RISK POOL MANAGEMENT
Are you properly pricing the plan in order to attract the best risk pool?
Improper management of this key factor will drive away the good risk, leaving ONLY the bad risk in the pool.
Simply put, healthy people make consumer driven decisions (until they get sick), while unhealthy people stay put as the cost of the plan pales in comparison to their true expenses.
4. REACTION TO PREVIOUS PLAN YEAR
Do you react to prior plan year events?
If you answered yes, you are not alone. That being said, reacting to prior plan year events is completely irrational, and we can prove it. Good and bad years are anomalies in an actuarial analysis.
If you react incorrectly to bad years, you will misprice your plan and drive away the good risk (see issue 3). If you react incorrectly to a good year, you’ll misprice the expected claims and underfund your plan.
5. FIXED COSTS
While we list it last, we find that Fixed Costs are the thing that most people get hung up on.
What is the platform/carrier charging for access/service and how is your insurance set and priced? Most companies manage their fixed costs reasonably well, but pay little attention to issues one through four, leading to very inefficient healthcare plans.