Jim’s Take

Attention CFOs — A Renewal Pipe Dream?

Imagine this if you can.  You’re with your CEO or maybe with your CEO and the Board of Directors, and you’ve been asked to give a summary of the health plan in recent years and going into the next fiscal year.

You look confidently around the room or across the desk and you say:

“Well, it’s been a pretty good three years. 

  • “Two years ago we got a 7% increase from our then carrier – it was the third straight increase in premium, and the plan had largely become less attractive to employees over that period.
  • “If we stayed with them our options were pretty much limited to making the plan “leaner” (read: “cheesier and less attractive”) and I wasn’t prepared for the inevitable turnover that would cause.
  • “So we took a new track, and I’m happy to report that this is what we’ve accomplished over that time:
    • “In that first year of our new approach, the actual cost we paid was 83% of our original renewal, a 17% savings.
    • “What’s more, in the second year our cost was only 87% of the first year’s renewal and was again 83.1% of what the cost would have been if our prior carrier had given us a 5% increase, far less than we had been seeing.
    • “All told, we have reduced our PEPY health care cost by $2,341 in Year 1 and brought that level to $2,568 PEPY in Year 2.
    • “That’s a total reduction of $4,901 per covered employee in two years.
    • “In addition to that, employees haven’t had an increase in their premium contributions either in Year 1 or Year 2.
    • And I’m happy to say that we plan to leave their contributions the same in this next year. Three years at a zero percent increase – employees are quite happy.
    • “But we’ve done more for them. In that period the deductible went from $2,000/$4,000 in Year 1 to $1,750/$3,350 in Year 2, and it will be $1,000/$2,000 in the coming year.

“Despite all these improvements in employees’ costs, we have reason to believe that our claims will decline again in the coming year, barring an unexpected medical catastrophe, because we have continued to link employees’ lower costs to employees’ intelligent participation in health delivery.

“We genuinely expect to see level-to-declining PEPY health care spend over the next couple of years.”

Sound impossible?  Well, it’s not.  It’s the actual discussion that the CFO at a Massachusetts trucking company is having with their CEO and board in December 2018.

Think about it – — we’re talking truckers.

These folks are good, hardworking, honest people who face a lot of health challenges.  Their job is largely sedentary.  They face hours of stress daily as a result of traffic and weather … they want to deliver their loads on time and safely, and there are idiot drivers and New England weather that seem to conspire to keep them from doing that — lots of unhealthy stress.

And how about their eating habits?  At least one meal – the midday meal – is probably purchased at a fast food joint.  Lots of salt, calories and saturated fat.

Truckers are a walking, or driving, medical emergency waiting to happen.

Yet for this trucker, their costs today are exactly what was outlined above in that “hypothetical” conversation.

We know the secret of how to help CFOs like you have conversations like these with their Boards or with their CEOs.  If you’re intrigued and want to make this happy pipe dream into a reality for YOUR firm, you can do any 1 of three things:

  1. Way number 1 (The Hard Way) – Print this article out, write your name and address on the bottom of the printout, and fax to 978-474-4379. We’ll know what to do with it.
  2. Way number 2 (The Kinda Easy Way) – Call 978-474-4730 and ask for me, Jim Edholm, tell me you want to set the stage for a happy renewal pipe dream. I’ll know what to do with it.
  3. Way number 3 (the Piece of Cake Easy Way) – Email me at jedholm@bbibenefits.com and put “Give me my renewal pipe dream” in the headline and your name and address in the body of the email. We’ll know what to do with it.

I look forward to pumping up your EBITDA!