Are you a decision maker at your business? If you’re a CEO, CFO, the head of HR, or perhaps the owner of a small, medium or large business then you owe it to yourself to check out this fairly simple solution to save over 50% on your health care spend.
Health insurance is usually one of the biggest overhead expenses after salaries for any company and it affects the bottom line of nearly every business. Imagine what your company could do if it paid out less than 50% in its health care spend – while also maintaining a similar if not improved plan for employees.
Before you scoff and say that there is no way you can provide your employees high quality care at less than half the cost, just remember that only about 25% of every dollar spent in health care actually goes to caring for patients. There’s plenty of room to cut.
Why Health Insurance Is So Expensive?
The reasons for expensive insurance is obviously a complicated question. However, it’s simplest to think of it in just a few ways – especially when we look for ways to bypass the rotten system to save real money for our business.
- The insurance companies make money by paying out a lot in claims. This seems illogical at first glance but makes a lot of sense once you realize that the insurance companies are only allowed to use 15-20% of the total they pay out in claims towards profit and overhead. Therefore, the more in claims payouts, the higher amount they can profit.
- Pharmacy benefit managers (PBMs) hang onto the rebates. Instead of passing on the volume discounts (or rebates) onto the employers and employees they keep that percentage of charges. Just like the insurance companies, the more that is paid out in charges the greater revenue they get to keep leading to ever increasing pharmaceutical prices.
- Insurance brokers primarily make their money through commissions from the insurance companies. This incentive leads them to find only solutions for your company that involve large insurers. The only way you can actually save money is to bypass the traditional means of creating a health plan which most brokers are not aligned to do.
Building a Better Health Plan?
What becomes readily obvious as far as solutions go is that you must create your own self-funded health plan and find transparent PBMs and rational contracting to pay for services. Very few companies are prepared to do this which is why you need to find insurance brokers and third party administrators who can set it up for you. There are plenty around, you just need to seek them out.
I’ve had two on in the past whom I reference in the show. Of course, they are hardly an exhaustive list of players in the field but they would be a good start for anyone investigating these solutions for their business: Katy Talento of All Better Health and David Contorno of Epowered Benefits.
Episode 176: Today’s show
Episode 111: Katy Talento tells us how she saves businesses money.
Episode 150: David Contorno explains his business model.
Episode 043: How PBMs jack up drug prices.
All Better Health: Katy Talento’s business where she helps others create their own health care plans.
E Powered Benefits: David Contorno’s business helping others create health care solutions.
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