Audio Transcript: The Health Plan Edge 005, Managing Costs

Steve Strauss:  Welcome to the Health Plan Edge. The podcast that makes it easier for small businesses to navigate health insurance. I'm your host, Steve Strauss, USA Today's Small Business Columnist and the author of "The Small Business Bible." In each episode, we share real small business stories and strategies that make health plan decisions easier for you.

  [00:00:30] Today's topic is something important to all small business owners, and that is strategies to manage health plan costs. With me today to figure that out I have three great guests. First is Robert Horton. Robert's been helping small business owners design plans that work for them for over 20 years while working with UnitedHealthcare. Also, I have Jason Bruce, who runs UNICOM Industries. UNICOM was a private label distributors of industrial [00:01:00] chemicals. It's based in Dallas and doing business all across Texas. He employs about 30 salespeople who are compensated 100% on commission, and the company has offered health benefits for ten of its 15 years. Finally, I have Mike Matheny, who runs Folklore, a digital agency based in Minneapolis and doing business across the U.S. Mike employs 17 people and offers 100% health insurance coverage for employees and 50% coverage for dependents.

  Robert, let me [00:01:30] begin with you, as we all know, health care costs keep rising. So I'm wondering what a small business owner can do to deflect this and deal with it?

Robert Horton:  Yeah, so there are different opportunities and strategies that a small employer might be able to deploy to help drive down some of those healthcare costs. One would be tied to the network that they have, that's associated with their plan design today. They could potentially look at a more narrow network that might be more efficient and have a lower premium [00:02:00] tied to it. If they don't have health savings accounts offered today to their employees, they could potentially offer those type plan designs, which offer some premium savings as well as the ability of their employees to save for future health care costs. They could potentially look at some primary care driven plan designs where the employees designate a primary care physician and that physician actually directs the care for that employee and that allows for lower healthcare costs. And then there are new plan designs [00:02:30] that are out there in a self-funded type environment, as well as associated health plans, which were recently announced that are gonna be an opportunity for small employers to look at some savings. And then finally, they can reach out to the broker and make sure that they market their plan. That they're seeing all the different options out there in the marketplace. Whether it's fully insured, self funding, or potentially an association health plan opportunity.

Steve Strauss:  Well it's great to see there are a lot of options available. Mike, let me turn to you on this, [00:03:00] obviously with offering 100% coverage is not inexpensive, you must give out costs a lot. How do you keep costs down? What does your business do to keep a check on things?

Mike Matheny:  Sure, so we take a look obviously as a small business, and any size business, we look at the bottom line and the cost all the time. I mean, we absolutely have to. For us with this one and when it comes to the insurance, we look at it every single year. We weigh staying with the company we're at, the provider we're at, and looking at others [00:03:30] and what they can do. And we weigh it against other options. So we've looked again, as I have talked about it before where eye and dental could be something we offer but we'd have to cut back a little bit on the health, in order to make that pool of money work.

Steve Strauss:  So do you comparison shop different plans every year?

Mike Matheny:  Yes, we do. We do shop plans every year, we take a look at different ones. One of the big ones I'm up now against and I'm not exactly how I'm gonna handle this again, our current health care is here in Minnesota only. This makes it so I'm going to need to look [00:04:00] for national coverage.

Steve Strauss:  Robert, what about you? I mean, which of these different ideas are the most common and how much can someone save using these different ideas?

Robert Horton:  It varies across the board a little bit, but every little bit can help, right? So if you decide to look at a product that's got a little bit more of a narrow and tighter network based upon the outcomes of a particular provider group or hospital system, that could save you in the neighborhood of 3%. That primary care [00:04:30] driven model I referenced earlier where employees designate primary care physicians to guide their care, that could have savings in the 4% range. Then, if employers haven't looked at small business self-funding in awhile, they may wanna take a look at that. I'll tell you that it's not for everyone because the pricing is based upon demographics. If you've got a more mature workforce, you might be better off in a fully ensured environment but if you're on the flip side and you've got a lot of younger employees, you might be better off looking at [00:05:00] a self-funded plan as that can save you in the neighborhood of 10%. So there's a number of options out there, but those are three that are the most prevalent.

Steve Strauss:  That idea of self insurance is really interesting. I'm wondering, can you explain, what it is and how it works in the small business world?

Robert Horton:  So the plan designs are somewhat similar to what's offered in the fully insured space today. What's a little bit different about it is a couple things. Number one, the employer has the ability to share in any surplus that there might be [00:05:30] after 12 months, which they don't see in a fully insured environment. There is a difference in that they have to go through medical underwriting, where each employee has to provide individual evidence of insurability, so there could be some rating based upon that. But if you've got the right demographic group and you got the right health mix within that group, small business self-funding could be a very good option for you.

Steve Strauss:  That's great. One other idea that I see small business owners utilize quite often is [00:06:00] a high deductible plan. They'll raise the deductible and at least they're still giving their staff insurance, may not be as much as they want, but at least they're doing it. What do you think of high deductible plans as a tool for keeping your cost down?

Robert Horton:  Yeah, so obviously it does pass some addition cost onto some employees in the form of a higher deductible. But we're seeing plan designs in the market that have these higher deductibles but there's still some low cost [00:06:30] copays as it relates to basic care that you're gonna get day in, day out.

Steve Strauss:  Mike, let me turn to you on this, have you looked into ideas like that before?

Mike Matheny:  Well, we've looked into both high deductible plans and HSAs when we do our evaluations of different insurance coverages per year. We have gone back towards that full insurance which is more important to our employees and personally ourself for right now.

Steve Strauss:  So Jason, as we all know, health care costs are rising, it's a challenge for small businesses. I'm wondering [00:07:00] what have you tried, what has worked for you with regard to your healthcare plan that you offer so generously to all your employees?

Jason Bruce:  Well, the most broad offer is only seem to be the one that's worked for us, like the PPO.

Steve Strauss:  By the way, wanted to let you know, PPO is a preferred provider organization, it's one kind of health care plan. If you wanna know the different kinds of health care plans, we have a podcast on that too, if you take a look. Jason, let me ask you this more broadly in regard to offering health [00:07:30] care coverage for your team, why do you find it important and why does your staff find it important?

Jason Bruce:  Well it's important to make your employees happy and feel safe and secure. Most do not feel that way if they don't have health covered insurance.

Steve Strauss:  Well that was a great discussion and I hope you see that even though health care costs do rise, there are plenty of strategies for keeping them in check and getting a handle on your healthcare costs. So I would like to thank [00:08:00] my three guests for being with me today, Jason Bruce, fantastic, Robert Horton, as always, great having you, and Mike Matheny, you too. Thanks to all of you for being on the show today. From all of us here at The Health Plan Edge, thank you for listening.

  And thank you to UnitedHealthcare for making this recording possible. If you enjoyed today's show or if you have any questions about health insurance in your business, head over to to check out their free resources for small businesses, to listen to another episode, or to continue [00:08:30] the conversation. We look forward to hearing from you.