Benefit brokers court the C-suite to bring cost-cutting change to health plans

Heath insurance brokers and industry suppliers have been courting the C-suite in hopes of deepening their footprint with self-insured employer clients. The strategy? Speak the language of business.

In pursuing more aggressive communication strategies to earn this business, brokers are selling self-insurance as a way to slash the largest negotiable operating expense, reinvest savings in the workforce and improve EBITDA (earnings before interest, taxes, depreciation and amortization). CEOs, COOs and CFOs understand the urgency of clamping down on arguably the biggest profit-and-loss line item other than payroll to make their operation more profitable.

Just ask Rich Tritel, CFO of Carter Myers Automotive (CMA), a Virginia-based dealership with 27 locations across the state. Since 2019, CMA has saved $3.4 million with third-party administrator WellNet Healthcare. WellNet presented CMA with about 20 cost-saving strategies from which to choose. Management decided to focus on international prescription sourcing, MRI carve outs at local facilities, bundled contracts for high-cost medical procedures, billing errors and thinning the ranks of plan enrollees by promoting Medicare marketplace plans and COBRA coverage for those who were eligible for such options.

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As a result, the automotive dealership waived three months of health insurance premium contributions for two years for its more than 600 employees. The so-called "premium holiday" at CMA – which was suggested by the company's independent benefits broker, Kathie Naylor – had a massive impact on the workforce.

"There's no question that it reduces turnover and creates more long-term employees," Tritel says. "You can feel it in the morale of our associates and our reputation in the industry."

Once CEOs and CFOs understand that a properly designed self-funded health plan poses no greater financial risk than a fully-insured plan, NextGen Benefits President Nelson Griswold says they recognize that a more efficiently managed healthcare supply chain will improve quality of care and reduce costs.

"The challenge for brokers," Griswold says, "is speaking the C-suite language and using the right messaging to persuade the CEO or CFO to adopt these new strategies."

After years of facing 15% rate hikes on fully insured health insurance with no visibility to actual claims, and in spite of decent loss ratios, CMA switched gears and pursued a self-insured solution. CMA also increased the employer share of coinsurance to 97% from 95% for employees and to 47% from 34% for families, as well as raised the health savings account match to $50 a month. 

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Keith Lemer, CEO of WellNet Healthcare, notes the importance of a partnership among key stakeholders to help shore up the bottom line. As part of that three-legged strategy, the C-Suite is empowered to tackle this P&L expense, insurance brokers and advisers can support their clients as never before and partner with a specialty vendor to lower costs and improve quality by educating employees with high-touch advocacy.

"This is a type of win for the C-Suite and HR if you can get the healthcare cost benefit done correctly," he says. "It impacts culture, it impacts employee retention and it impacts talent acquisition."

Since CMA is laser focused on building an employer brand in their community, Lemer notes that the auto dealership is very intentional with every employee interaction, which correlates to customer interaction.

"They wanted to make an investment in their people, culture and productivity," he says. "And so they did that the first year and people went bananas. I believe the savings for each employee was a little over $3,000 for that three-month period, and it went over very well."