Like many employers today, one Arkansas County was struggling to provide an attractive health insurance benefit plan to its current and prospective employees. The cost of insurance and their experience with
a self-funded plan created a dilemma that would have hindered their ability to provide even catastrophic coverage to the members of their plan.
The anticipated increase in premiums, in addition to the reduction in benefits, would have adversely affected the take home pay of every single employee, regardless of whether or not they were on the plan. In order to have funded their claims, they would have had to take from other discretionary lines, specifically payroll.
Simultaneously, they realized that the typical strategy of paying for increasing health insurance premiums would only work temporarily. In order to ensure a better future for their plan they would have to identify and deal with cost drivers, which ultimately was the size, number, and frequency of claims.
Overall Claim Spend Increased Dramatically
A two year claim review revealed some eye-opening facts. Additionally, their claim spend was increasing by over 1 million dollars a year.
- Total claim lines had increased from 6,424 to 11,682 in oneyear
- The average claim amount per participant was $6,574.55, a 50% increase in oneyear
- The percentage of total claims that were considered catastrophic jumped from 13% to37%
- In two years, they were spending 50% more just on pharmacycosts