Pinterest has joined a growing rank of employers who are fed up with the healthcare system and doing away with traditional insurance models as a result.
The social media platform switched from their traditional healthcare plan to a self-funded model provided by Collective Health, a San Francisco-based healthcare and benefits company, at the start of 2018. Pinterest executives — who just made public the change — say the company made the switch because they were frustrated with their previous provider’s prices and services.
“Nobody remembers how good health benefits are on paper, but everyone remembers what the experience is like,” says Alice Vichaita, head of global benefits at Pinterest. “Despite all our effort and thoughtfulness, the traditional health insurance experience was letting us down.”
Pinterest isn’t the only employer to seek out alternatives to the traditional healthcare system. Last year, Amazon partnered with JPMorgan Chase and Berkshire Hathaway to form an independent healthcare company —
“We compete for talent against a lot of brand name, larger tech companies, but we don’t have their level of budget to be able to do all the fancy things you hear about,” Vichaita says. “Instead, we have to be incredibly thoughtful around what we offer, how we present our benefits while ensuring benefits are always relevant and helpful for our people.”
Healthcare costs are projected to increase by 5% for the sixth year in a row, according to a survey by the National Business Group on Health. Employers bear the bulk of the burden for healthcare costs; the survey estimates the cost of providing employer-sponsored healthcare will be $15,000 per employee this year.
Collective Health executives say a self-insured model gives employers more control of their healthcare spending.
“With the traditional insurance model, you pay a flat rate for an insurance company to bear the risks — but you’re often paying more than you need to,” says Kirk McConnell, vice president of product marketing at Collective Health.
Self-insured health plans save companies money by picking and choosing coverage from multiple providers. Collective Health partners with healthcare networks — like Anthem Blue Cross and Blue Shield — to negotiate the best rates for their clients, McConnell says. Those health and wellness plans are uploaded to Collective Health’s platform, where they can be accessed by corporate clients and their employees.
“We allow an employer to bring together solutions that work for them, and we weave them all together into a thoughtful experience,” McConnell says.
It takes two years for Collective Health to determine their corporate clients’ healthcare savings after switching from traditional insurance, McConnell says. Pinterest hasn’t hit that mark yet; but in 2017, Collective Health claims it saved companies $500 per member household, according to an internal study. The company estimates they’ve lowered client medical trend to negative 0.3%, against the industry average of 5% increases per year.
Collective Health provides healthcare to 45 employers, including Red Bull, eBay and CrossFit. Their plans cover over 200,000 employee dependents, McConnell says.
“Increasingly we’re seeing people who don’t love traditional insurance,” McConnell says. “Health insurance is too important to think about the same old way. And now we have five years’ worth of data to show it’s not just a good idea — it works.”
Collective Health designs and administers health plans but also aims to relieve HR departments of answering employee questions about their health plans. Vichaita says Pinterest employees were frustrated with the company’s last insurance provider because they couldn’t get answers whenever a claim was misfiled. But last quarter, Collective Health responded to 70% of all Pinterest employee healthcare questions, she says.
“I’ve stopped getting emails from employees saying their question wasn’t answered,” Vichaita says. “That was something we noticed immediately — even in the first 2-3 weeks of being with Collective Health, we saw a huge drop in member issues.”
