Employers: Spending Too Much on Health Insurance?

Yesterday, I had the opportunity to discuss and review the health insurance program for a company that employers and insures close to 100 people. They were frustrated with ever-increasing premiums, and rightly so.

Currently, their monthly fixed premium paid to one of the three most frequently used carriers is right $70,000/month or just shy of $840,000 for the year. The insurance carrier controls this money. They control what you are allowed to buy with this money, and dictate which providers you are allowed to use when services are needed. Furthermore, they have no idea what they bought with this $800,000-plus or what they are being charged. All they know is that an insurance agent brought them a premium quote - but no information about what their real costs are. 

That however is only part of the story. The company is located in a rural community of about 8,000 people. The local independent pharmacist is a five minute drive from their facility. I was told that the company’s president has dependent children who are diabetic and have monthly needs for required medications and supplies. I was told that under this company’s insurance plan, he can not drive across town to get these prescriptions and supplies form the local independent pharmacy, but must instead use the supplier designated by the insurance company. I was told that this has become a regular battle to get these supplies because of lead time an insurance company interferences. 

This is the kind of situation that has a solution, it's just too few business owners take advantage of it. My solution was simple: Instead of pumping $800,000-plus per year into one of the big three insurance companies, not knowing where it's going or what your true expenses are, set up a system where you control the money, the costs, and know what you're getting. For all he knows, he is spending that money for just $12,000 worth of drugs! I will work with him to take that part of the program away from the insurance company and the Pharmacy Benefit Managers (PBMs), and work directly with his local pharmacist.

 The costs will go down the services will get better, and you will know what you are being charged. 

A long standing client sent me an email a couple of weeks ago telling me that when he changed from using his insurance/PBM card has diabetic supplies cost went from $600=plus with insurance to $345 cash. Let's fix this and start working with our pharmacy and medical professionals directly instead. That is what large employers are doing - small to medium size employers can and should do the same.