Tom's Take Blog
November 8, 2017
Do companies realize the substantial health plan savings promised when moving to a large carrier?
Tom’s Take: The timing of this question is near impeccable as we recently had a similar situation come up with a former (now return) client. It’s easy for the large carriers to promise a company big discounts and lower claim costs with their health plans, but not so easy for them to follow through on those savings for the long term.
Consider this example. A growing construction firm that was partnering with Cypress experienced a high volume of claims one year. Eager to cut costs in the next 12 months, the client moved from our TPA firm to a large carrier after being told its health plan expenses would be drastically reduced.
The client did see lower costs that first year, but those were pretty much washed away with an unanticipated 45% increase the following year. Something else that was unexpected? The lack of access to health claim data combined with less-than-stellar customer service. When the client’s HR staff wanted a closer look at care trends or utilization rates, that information wasn’t available. When they had questions about claims? They were passed from person to person and didn’t always get the answers needed. These frustrations ultimately led the firm back to Cypress.
If the large carriers come knocking, my advice to companies is that you should always consider the bigger, long-term picture regarding health plan savings.
As far as savings, those deep dollar discounts may look pretty tempting on paper (especially after an uncharacteristic year of costly health claims), but they’re often too good to be true. Yes, you might see some savings in the short-term, but what comes after that? What if your rates go sky-high? On top of that, think about everything else that makes up your health plan – and what you might lose. My hunch is that most employers aren’t willing to give up exceptional customer service from a TPA or access to the claims data that tells the story of what’s happening with their plans.