Taming the Health Insurance Monster

Specific Strategies to Help the Business Lower Its Health Care Costs

It’s your largest benefits cost: Health Insurance.

BBI works in Massachusetts and New Hampshire only – which are two of the highest cost health markets in the US. The average cost is about $10,000 per employee per year. And rising.

What’s more, look at the chart below from The Henry Kaiser Family Foundation ( and the Health Research and Educational Trust ( As you can see, premiums have grown by 191% since 1999, compared to a 54% growth in workers’ earnings and 43% growth in inflation.

But employees have fared even worse than employers. Their share of the premium is up 212% during that time – and today’s deductibles and coinsurance costs are higher than those in 1999.

And smaller companies, like the ones we work with (15-150 employees) pay more than their gigantic competitors. The smaller, MA/NH company is getting attacked from all sides.

What to Do?

Just what can you do to reduce the burden? Your approach varies somewhat, depending on the number of people covered on your plan. Here’s a thumbnail sketch of what you can do based on the number of employees covered by your company plan:

Under 10 Employees:

You’re limited to off-the-shelf plans. Look to modify your:

  • Carrier options, i.e. shop the plan and move carriers when needed,
  • plan’s copays (doctor, Rx, ER),
  • deductibles (up to $3000 single, $6000 family with restrictions),
  • plan format (HMO, PPO, HSA), and
  • Network options (full network, limited network)

That’s about all you can do. You can only share so much risk, and you have very limited design options.

10-35 Employees:

You have a bit more flexibility. Not from the conventional carriers (State law limits their flexibility when the population is under 50 lives (2015) or 100 lives (2016). You can do everything the <10 group above can do, but in addition you now have the ability to share more risk with a carrier. You can access 2-3 insurers/TPAs (Third Party Administrators) from 10-25 covered employees, and about 5-6 from 25–35 employees.

If you do want to consider partial self funding (and if you don’t at least familiarize yourself with how it works, you’re making a mistake) you’re going to have to have each of your employees submit a medical questionnaire to the carrier.

That sounds like a pain in the neck, and it can be, but it has a hidden advantage: you’re very likely to know in advance how well or how poorly your experience will work out. The carrier will use the medical information to determine your rates. If there are some nasty conditions out there that you don’t know about, the carrier will let you know via your cost projections.

That’s a good thing. If you have a sick group, trust me, you’re better off in the fully insured pool. Medical underwriting lets you discover that without spending a penny.

35-100 Employees:

Your options expand dramatically. You still have all the usual carrier choices, but now you can access some serious players in the partial self funding world. And in addition to multiple carriers and TPAs, you also have access to some plan-specific strategies to lower your costs:

  • Captive insurance plans – spread the risk even further.
  • “Wellness with Teeth,” a program that has been proven to be capable of cutting three-year medical cost trend in half.
  • Transparency tools. These allow you to reward your employees for making health care choices that save you money. If an employee chooses the $1,700 colonoscopy provider instead of the $2,300 provider, do you mind giving her a $100 cash reward?
  • Lower cost generics. Using the right vendor you can purchase generic drugs so that employees get a $0 copay and you get a 15-25% savings on your pharmaceutical costs.

These programs are the real secret to self funding : interceding in and helping to curb the growth of employees’ use of health care resources – one-third of which is unnecessary, harmful or both.

Over 100 Employees:

Katie, bar the door! Now you can really go after it.

Carriers have to reveal your actual claims for the prior year, even if you’re fully insured. And they have to identify any large claims (typically over $25,000 or so). So you can go into it with eyes wide open. Carriers know what’s going on, so they have the confidence to get more aggressive with their rates. And you get access to even more tools to control costs:

  • Brand name Rx savings. Similar to the generic program above, it’s possible to purchase brand name drugs in manufacturers’ original packaging at prices significantly below what you typically pay through your plans Pharmacy Benefits Manager. It’s a cutting edge program, but drug costs are so obscene that it can provide a powerful incentive to you.
  • Specialized treatment centers for serious conditions. High volume providers have the best patient outcomes – fewer infections, fewer readmissions, etc. With the program we can provide, you can get access to significant discounts from top notch specialized treatment centers nationally. Save tens of thousands on those “shock claims.”

BBI has worked with smaller self-funding employers since 1984. If you’d like a free copy of Jim Edholm’s book, “An End Run Around Obamacare – Using Self Funding to Lower the Costs of ACA Compliance” simply click here to order.

I love [BBI’s] amazing resources as well, especially their HR help service, which is complimentary to all their clients. I would recommend BBI without reservation, for any business who is looking for a highly reputable, customer-focused, and very personalized benefits broker. You won’t be disappointed with BBI.

Mary Ann Janigian, Human Resources Director
Boston, MA

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