Stop accepting ‘less bad’ insurance rate increases

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This year’s health plan renewal looks eerily like last year’s renewal. In fact, it looks like the renewal three years ago and it even resembles the renewal of five years ago.

This renewal game continues playing out the same way every year. The insurance carrier releases the renewal with a 12%-14% increase. Then, the broker goes to the client and asks, “What kind of increase have you budgeted for?” Already knowing there will be a negotiated reduction.

The client provides the broker with a number and the broker negotiates the increase just under the budgeted number. Everyone is happy, or so it seems.

When employers give in to accepting the “less bad” rate increase, a predictably bad outcome has occurred, and the company checkbook finds itself on the losing end, yet again.

Yet, the broker community continues to allow predictably bad outcomes to wreak havoc on the health plans of employers around the country. Why does this continue to happen, you ask?

Also see:11 benefits workers want.”

The answer is simple. Accepting predictably bad outcomes come with little work and little disruption for both broker and client.

Demand results

Here’s the problem with this strategy: In allowing your client to accept a “less bad” rate increase you’ve doing nothing more than place a small Band-Aid over a gaping wound.

The Band-Aid is only going to protect you for so long. Because the gaping wound, in this case the cost of the health plan, is going to continue bleeding and, before long, it will become an infection spreading across the organization eating away at both profits and wage increases.

Employers must demand results. The broker community must step up to the challenge and move away from generating activity and start creating positive outcomes.

Neary will expand on this issue in an opening keynote at EBA’s Workplace Benefits Renaissance on Feb. 27.

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