Chronic Conditions Add to Costs for Self-Funded Plans

By: Dom Palmieri April 27, 2017

As a result of the changing health care landscape, we have seen a growing number of employers turn to self-funding to better manage costs and meet coverage needs through a more controlled approach. They see value in taking on financial risk to gain plan design flexibility and potential savings. And we work with their brokers to demonstrate the importance of Stop Loss insurance in guarding financial health in a health care environment where catastrophic claims are on the rise.


Cost growth is particularly evident when you factor in the impact chronic conditions have on the treatment plans of many of the sickest claimants. Not only does the treatment of chronic conditions add to overall claim costs, these chronic conditions complicate the treatment of other critical medical situations.


Chronic diseases and conditions commonly include heart disease, stroke, cancer, diabetes, obesity and arthritis, which are considered by the Centers for Disease Control and Prevention (CDC) to be among the most costly and preventable of all health problems. The CDC also reports that about half of all adults have one or more chronic health condition – and one in four have two or more! This is particularly startling when you’re in the business of underwriting insurance to ensure that claim obligations can be met. But there are a number of approaches that self-funded employers can take that may control some of the rising costs that may be associated with chronic conditions.


Care plans and wellness programs can be implemented to assist employees with chronic conditions in improving their overall health. Doing so requires evidence-based metrics for the group. With this approach, employers can build a program to improve the overall health of their population once they determine the conditions most prevalent in their workplace and what types of programs they can afford to implement in order to work toward long-term savings. When done right, these programs may result in fewer preventable trips to the emergency room, reduced hospital admissions and/or a reduction in pharmaceutical use and spending.


Some of strategies include biometric screenings, employer-sponsored clinics, disease management programs, health and wellness apps and value-based benefits that offer incentives to improve or maintain a certain level of health. As an added bonus, workplaces that offer employee wellness programs and other assistance to employees with chronic conditions also may benefit from increased workplace productivity as employees improve their health.


Our experience in the Stop Loss market has allowed us to see first-hand the impact chronic conditions have on the overall health spending of our self-funded clients. There are many programs and strategies administrators can put into place on behalf of the plan to proactively manage first-dollar costs so that they have the potential to remain below the catastrophic level. Staying on top of spending trends is essential to developing cost-saving solutions that enable groups to continue providing the best, most comprehensive coverage to their employees.


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