Health insurance is expensive because the cost of care is expensive.
Or is it?
Interestingly, from 2017 to 2019, hospital cost trends from commercial carriers were 4.5%, 5.2%, and 7% each year, respectively. In those same years, Congress set the cost trend for Medicare hospitalization reimbursements at 2.7%, 1.4%, and 3.6% and is projected to only be 2.8% for 2021.
Why is Medicare so much lower?
Truthfully Medicare and the other government programs do not pay their fair share of the cost, so these trends are lower than they should be. These rates include a small amount of profit for the providers, but truthfully these are closer to break-even rates. The providers are making up the difference on the commercial plans. But at what percentage? 200% to 300% of Medicare reimbursement is not unheard of.
If your goal is to control the cost of your premiums, you must control the cost of what the plan is paying for. Make sense?
Currently, fully insured carriers want you to use smaller networks and more employee cost-sharing to ensure lower medical plan costs. In reality, this savings is so small, it really doesn't make a difference and causes satisfaction issues with your employees when they can't see their doctor.
Maybe it is time to change your reimbursement schedule?
We appreciate the opportunity to work with you.
Thank you so much.
Gregory S. Sailer RHU, REBC
SAILER BENEFIT SERVICES, INC.
UNIQUE EXECUTIVE & EMPLOYEE BENEFIT STRATEGIES FOR TODAY’S BUSINESS