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February 1, 2021

Health Benefits. Is Cheaper Really Better?

By Josh Smith

“We once thought we couldn’t afford Portico, now we realize we can’t afford NOT to be with Portico!” – Reier Thompson, MBA, LNHA, HSE, President/CEO, Missouri Slope

Health benefits play an important role in recruiting and retaining talented and dedicated employees, but it can be hard to find benefits that provide both upfront affordability and long-term value.

If you find benefits that appear cheap, look beyond the bottom line. Are you spending less in the beginning only to spend more later?

In this blog, I’ll explain some important points to think about as you asses benefit providers. Hint: Look past the initial cost and ask yourself, “What am I really getting for my money?”

Improved Long-Term Financial Outcomes

Start with annual rate increases. What are a provider’s rate increases for the past five years and what are the projected increases for next year? Will they guarantee rate caps? Then look beyond rate increases to how they improve health outcomes. Can they demonstrate how they have measurably improved health outcomes for their members?

The question of outcomes is important, because poor health outcomes are directly linked to higher claims costs. Those high claims can have a big effect on your annual rate increase – meaning that if a provider can’t demonstrate improved outcomes, those health benefits that looked cheap may get expensive quickly.

At Portico, we approach health care from a perspective of personalized, whole-person well-being, which has demonstrated a positive impact on outcomes. We’re also able to leverage a large pool of members to better manage pricing fluctuations. That matters because being part of a small pool can have a significant pricing impact. If you’ve ever had a year in which one or two high cost claims led to double digit rate increases, this was likely in part due to the small size of your member pool. At Portico, our size is one factor that allows us to better absorb costs.

When outcomes improve and pricing fluctuations are better managed, everyone benefits. Over the past five years, Portico has kept health plan rate increases well below the national average. In 2019, our rate increase was 4.5%, in 2020 it was 4%, and in 2021, 3.5%.

Better Employee (and organizational) Well-Being

Employees who are healthy in mind, body, and spirit are more present and productive at work. That matters operationally and financially for organizations because the cost implications are significant. According to the Integrated Benefits Institute, illness-related lost productivity costs U.S. employers $575 billion per year.

As you assess health plan providers, look at whether they can mitigate absenteeism and lost productivity through programs that promote better employee well-being. Do they have programs that proactively address employee needs like mental health support, care coordination, chronic condition management, and more?

Portico has long recognized the need to help members create and support well-being, which is one reason we offer programs targeted at meeting members where they are. This strategy has proven effective as we see high utilization in all of our well-being and care management programs – resulting in significant health care cost reductions and improved productivity at work.

Reduced Administrative Burden

Time is money, and the time your staff spends administering benefits is a real cost that many don’t consider. If you’ve found what looks like a cheap benefits provider, learn more about the level of administrative support they provide. Will they manage multiple vendors on your behalf, and more importantly do they even work with multiple vendors?

Think about the positive impact to your bottom line of working with a benefits partner who is an extension of your human resources team – managing annual enrollment, claims form submissions, and negotiating with multiple vendors.

Portico manages all enrollment, claims, implementation, and support. Portico also works directly with partners like Omada, Livongo, and Quantum on our members’ behalf so that they won’t lose time (and money) on administrative tasks.

Look at What Really Matters

The bottom line is that you need to look beyond next year’s quote proposal. By focusing on improving long-term financial outcomes and employee well-being, while reducing your administrative burden, you can be sure your health plan will provide long-term value.

If you’re ready to take the next step in your benefits exploration, you can request a consultation with a Portico representative to learn more about how we focus on rate predictability and improved health outcomes with less administrative burden for you.
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Josh Smith

Josh is a strategic and innovative benefits professional willing to challenge the status quo. In his time at Portico, he led a transformation in health plan design with innovative offerings that empower members and the organizations they serve to more effectively control costs and improve outcomes.

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