Health insurance costs are rising uncontrollably, and nobody can do anything about it. Simply not true, says David Spellicy, vice president and senior benefits advisor of Benefit Commerce Group.
David and his colleagues are on a mission to dispel that myth and provide insurance, at a reasonable cost, that works for employees and their families – as well as employers.
With health insurance being one of the top three expenses for many – if not most – businesses, having an effective plan in place is key to the health of the business itself. David shares little-known strategies for getting health insurance costs under control, as well as…
- The benefits of a multi-year strategy with health insurance
- The reason small companies can secure quality benefits compared to larger businesses
- Why you can’t simply “buy” an insurance plan every year
- A little-known tactic for building health insurance “equity”
- Unexpected ways quality health insurance can increase employee retention
- How to structure a plan so employees pay less for insurance, co-pays, and more
- And more
Mentioned in this episode:
Ryan Englin: Welcome back to another episode of the Blue Collar Culture Podcast. I am your co-host Ryan Englin, and I’m here with Jeremy Macliver today.
Jeremy: Welcome back, everybody.
Ryan: So today’s guest is going to share with us a topic that most business owners know something about. Whether they like what they know, or they don’t like what they know, they know something about health insurance and the health care industry right now, especially as it relates to us as business owners, what it means for growing our team, what it means for keeping great team members.
And I’m really excited to announce today that we’re going to be talking to the Vice President senior benefit consultant of Benefit Commerce Group. Now, they work with organizations of all sizes to help them tailor their health insurance needs for the business owner’s goals, but most importantly, to take care of employees and their families. So David Spellicy, thank you for joining us today.
David Spellicy: Hey, Ryan, Jeremy. My pleasure to have the opportunity to speak with you here today and be a guest on the Blue Collar Culture Podcast. Very exciting.
Ryan: This is great. So I like to ask this question about health insurance. There are a lot of opinions out there. There are a lot of things that are facts, and there are a lot of things that aren’t true. There’s a lot of myths about health insurance out there right now. What is one of the biggest myths that you want to share with our listeners that will get them to think differently about health insurance?
Health Insurance Myths Busted
David: Yeah, thanks, Ryan. That is a great question. And I will say that there’s a couple that come to mind. First and foremost, that just kind of jumps to the top is, you know, kind of rising health insurance costs, if you will. And the result of that is kind of this perpetuating myth that costs are rising. There’s nothing that we can do about it. It is what it is. And we’re all kind of victims of that, you know, hapless victims.
And that is absolutely not true. That is something that we prove day in day out week after week with our clients and the track record that we’ve put together for employers, their employees and their family members. There are other alternative ideas, solutions, strategies, very effective, very proven, that simply is unacceptable. That is our belief. And there’s a better way to avoid having those types of challenges and issues for organizations.
Ryan: So why do you think that myth is so prevalent then? If it’s simply not true, and it sounds like this is something you handle all the time you’re experts at it, why do you think people still believe that?
David: Yeah, I think that it’s been a result of, frankly, kind of an indictment of the consulting industry not taking that additional step, that additional effort to really put forth and kind of question the system and say why is that? Why are the costs going up year after year? There’s an answer for everything. And you have to, you know, have the motivation to dig down and really understand how these different components work.
And then ultimately figure that out and take that information, reconstruct solutions that deliver more positive outcomes and results for the people that we serve. And that is the employers, those organizations and again, the employees and their family members. These stakes are high, you know, if you think of an organization, many organizations from a health insurance standpoint, of all the various expenses that that organization incurs.
Health insurance typically can be in the top five, if not top three of expenses, and often rising faster than any other item in their budget. So it’s a lot of pressure for the organization, it’s a lot of pressure for employees or family members. The stakes are so high and yet, you know, this is just a critical area to help employers get their arms around it so they can be bigger, better, stronger and their employees be healthier and wiser.
Ryan: So what I just heard you say in that is that we don’t have to accept the fact that health insurance costs are rising. Like we actually have some control over that. Is that accurate?
Putting Control of Health Care Costs Back in the Hands of the People
David: That is absolutely true. And, you know, there’s a series of different decisions and different initiatives that can be put in place and strategies to achieve better outcomes and really put the control back into the hands of the organization and their employees. It’s aligning those components and getting a strategy. Not just a one-year type of commodity purchase price. That’s been a big part of, you know, the issue within, you know, my specific industry is, you know, these policies come up year after year, 12 months down the road.
And, you know, it’s kind of a commodity shopping, if you’re with one particular insurance company, you know, moving to another to try to find a little lower rate, you’re not really addressing the underlying issues. And putting forth the strategies with a partner that will deliver the outcomes that your organization needs, that’s where the difference comes into play. And it’s not just a one-year bandaid. This is a multiple-year strategy to put the company in a position of strength, leverage all of these different strategies and achieve those greater results.
Jeremy: I love how you mentioned that we’re just bandaiding it at the top. You know, we talk about that in so many areas of the business that we’re just running and going and we’re not fixing the root cause of the issue. And here’s a perfect example that with rising health care costs, we’re just bandaiding it by trying to find a cheaper provider somewhere and not actually digging into what goes on.
Why are these rising? And what can we do? So can you share maybe a couple examples of things that are underneath that that are a little bit deeper down that we could be doing that would be ideas, some strategies maybe you’ve deployed for some others that have caused, you know, a long term plan to not rise in costs?
David: Yes, absolutely. Great question, Jeremy. So, you know, I can give you example after example of numerous clients of exactly, you know, how we’ve done that. But, you know, there’s a couple that come to mind. And so, for example, as an organization, I have the privilege of working with fire service, first responders. And year after year, they were facing increase after increase in their health insurance costs.
And, you know, think about firefighters in the exceptional physical condition that they are in, that they have to be in to perform the occupation of their duties, right? To help all of us when we need them. They just crush it they’re after day. And yet this organization was faced with increasing costs. And the question was so, you know, obvious to me is why? Why is that? You know, is it that they’re having underlying, you know, issues? Are they driving claims that are driving their costs? And the answer was, no. No, it was not.
So, you know, without going too deep into the weeds of the insurance industry and how pricing and how renewals are done, there’s something used in that calculation of kind of the rating structure and it’s called trend. And trend is simply a term that the insurance industry uses. And think of it as medical inflation, medical and Prescription inflation. So when these rates or these rate rating models are built, you know, under actuaries and underwriters are taking that information to build out their pricing.
But part of that is that underlying inflation number. And we said, well, if we were to build plans where we could, you know, maintain, if not improve the health of our employees and their family members in these organizations, we should be able to directly impact that number in a very positive way to help knocking that down because that’s a significant driver in rising health insurance costs. Sometimes you’ll hear different conversations going on in a dialogue about bending the curve or, you know, bend the trend and all that stuff. And that’s what they’re talking about. That’s the big component in rising health insurance costs.
So we attack that number with very specific strategies, wellness initiatives, and if you think of kind of the worker’s compensation of wellness program, if you’re reducing your risk and liability, you would expect to have lower, you know, worker’s compensation premiums as a result. You know, improvement in that risk category. Or if you think of like kind of driving, you know, in auto insurance if you are an exceptional driver with a great driving record and if you had another individual who has the opposite, you know, a lot of tickets and accidents, you know, would you expect those two individuals to pay the same cost?
And the answer, of course, is no. So we just took that strategy, put it in place for our employers in the health insurance environment. Very surprisingly, that was not the kind of the thought when we started it, but we have been so successful in developing this program and the results for getting our clients out of that year after year cycle where they were subject to these, you know, very, very meaningful and significant increases that was impacting the new organization at all levels.
Ryan: I think that’s really interesting. You mentioned a few different things in there. Some of these things seem very actionable to me. And here at the Blue Collar Culture Podcast, we’re always about being able to take action. Because it sounds like it’s not just go buy an insurance plan and that’s it. You’d mentioned things like wellness programs and other things that can make your organization stand out in the eyes of the insurance underwriter. Is that accurate?
David: It is very accurate. Thanks for pointing that out. You know, it’s not one thing, it’s many things. Also, I want to emphasize, you know, aligning yourself with the right consultant and strategy and the team to be able to implement and execute on these on behalf of the employer without burdening the employer. Obviously, you know, the very different organizations that we work with, their various different industries in their area of specialty and focus we want them to be slowly, you know, dialed into that. And then the benefits piece of insurance is our obligation and responsibility.
That’s our role and serving them and helping them, you know, become bigger, better and stronger. So yeah, there’s many different things in there that you can do. You know, and I think it’s important to maybe put some context on the types of savings that we’re talking about. So if you’re thinking about redesigning these plans where the economic value of that, you’re either to maintain or improve in terms of the benefit that the employees receive, but you know, we’re talking about you know, just give me a couple of examples. If you have an organization of, say, 50 employees, there’s like a 70,000-plus save on average.
If you’re talking about 100 employees, it could be 140,000. If you have 250, it can be 350,000. This is, these are hundreds of thousands of dollars in many situations. And that can be reallocated to the organization to improve the benefits for employees, better position them going forward. And that’s an average save on the first year. Then the strategies that are implemented going forward are putting the company in a different direction, an improved stronger position, if you will, to leave behind what they were faced and challenged with before.
Ryan: So there is no, what I heard in that there is no silver bullet. There’s not something that I can just go do right now and it’s going to save me a bunch of money forever. But it’s being, it’s working with the right consultant who’s really taking that strategic approach to how you implement these different things to get the most benefit from it, the biggest return on your investment by lowering the cost of health care or health insurance, or even bringing more value to your employees. Is that correct?
An Ongoing Strategic Approach
David: Yeah, I would say that there’s many tools in the toolkit for us to evaluate. Have conversations with the organizations to really understand what their needs and goals are. So to your question and to your point, there are certain options that we can make a very meaningful savings for those organizations in the first year, which is obviously very beneficial and critical in a lot of situations.
And then on top of that, additional strategies and incentives and different structures to position those organizations to benefit from that pivot, and then also build upon that year after year. So I mentioned a couple, I’ve mentioned the one group that I work with, this is an organization going back a few years ago that had a reduction in their cost by 18-plus percent that was several hundred thousand dollars. Beyond that, their costs have stayed the same for the last three years beyond that.
Any of the employers out there listening, that may be very surprising to them because they may be faced with situations where they’re, you know, incurring these increases year after year. So this would be an example of that myth question that you asked me is, you know, if that sounds interesting to you, that’s a conversation we’d like to have. We’d love to have it with you. You know, another organization I work with behavioral health providers, you know, people are helping individuals on a day to day basis. Exceptional work. They were faced with such significant increases year after year. It was 20, 25%, 30%.
They actually were considering paying the federal penalty under the Affordable Care Act, which is a very significant penalty because it was actually in their mind starting to think that that could be the lesser of two evils. That’s a big number to pay each year that you don’t get anything for. It’s just a penalty you pay the federal government. So very similar to the other example I use. We were fortunate to allow them to give us the opportunity, met with the executive team.
They give us a year to put together a strategy to show you how you can have a better outcome and experience. And I’m happy to report that, you know, again, this is an organization that has had no rate increases for the last three years. Plus, you know, dramatic benefit improvement, you know, economic value, if you will, for their employees and their family members. So, you know, that all adds up to strengthening their organization and attracting and retaining, you know, top talent. So, yeah, this is the battle that is out there that is waged every day.
Ryan: Well, now you’re speaking my language. The way you ended that is the attracting and retaining top talent. That’s, you know, that’s what I do with my clients is help them with that and inevitably, pay and benefits comes up. And they’re always thinking, I can’t compete against the larger organizations with my benefits package. I can’t compete with these larger organizations and my salaries. And it sounds like you’ve got some ways that these smaller organizations can actually compete against some of these bigger companies. Is that true?
David: Absolutely. Yeah. So that would be another myth and understandably so. You know, maybe once upon a time, you know, larger organizations had very rich benefit offerings, and many still do. However, the thought if, you know, a smaller mid-size employer is thinking perhaps they’re at a disadvantage that they can’t compete, I would encourage them to, you know, to do the analysis, the evaluation.
As a matter of fact, I’ll mention this now because it’s a big part of our service to our clients as well as the community here. And that is so each year we do a statewide employee benefits benchmarking study. So this grants employers to participate in it and really get an understanding of how their benefits align in the larger sense of other employers, maybe specific to their industry, their shape, their size. Real critical information to understanding Well, how do they align?
Are they aligning, you know, equal to greater than, less than? And then also specifically providing them the information that if they need to look at alternative ideas or strategies, you know, what would that look like? And what would that mean in terms of improving benefit or reducing costs are aligning themselves to be in a stronger position to compete within their industry, You know, very, very comprehensive information. And that’s something that we do, we make available to any employer that’s interested. There is absolutely no cost or obligation and we’d be delighted to have individuals take us up on that.
Ryan: That sounds like an amazingly valuable tool for employers. And at the end of the episode, we’re going to tell them, tell our listeners how they can get their hands on a copy of that. So when we get back to the smaller businesses and being able to compete, do you have an example of a story that you can share with say, maybe an employer that had somewhere between maybe 50 and 200 employees and just the amazing benefits they were able to get by working with you?
David: Yeah, absolutely. So, you know, it’s been so evident here recently, not to say that it wasn’t before but in our current environment, you know, the tremendous compassion and concern of our health care system from the health care workers and such outstanding results that they deliver for all of us. However, the system itself, you know, health care and or, you know, insurance industry can often be very complicated, vast, confusing.
So helping employers navigate through that with their employees and their family members, you know, structuring the benefits to provide and equip employees with programs that help reduce their costs. So I say reduce their cost on the employee level, we’re talking about payroll deductions, you know, the amount that they’ll use or the amount they have to pay in terms of participating in the insurance plans. Then the other part of that is actually the amount that they incur when they seek services.
So, you know, services associated with physician visit or hospitalization test, the procedure, prescriptions, you know, can we construct the benefits to equip employees with first dollar benefits to help them pay for some of those expenses. And if they don’t use those available benefits, you know, it’s an opportunity for them to kind of bank those benefits for the future and build up equity. You know, so it may not be a year this year where they need to use them, but can they build them up for future potential expenses?
You know, kind of build up that equity, if you will. Very, very meaningful for employees to have that peace of mind knowing that those benefits are there. And then if and when they need them from themselves or their family members, just the amount of stress financially that that takes out of them and the goodwill that comes back to those employer organizations is tremendous. As I was starting my answering, I was talking with the health care system and how stressful it can be if an individual is faced with a medical challenge.
Obviously, you know, really rough time if they have a family member who’s faced with it, you know, we want them to be focused on that particular issue, getting, you know, getting treated, getting healthy, getting back to well. We don’t want to put additional stress and burden on them now to have to worry about the financial piece that’s hovering over them. You know, all the various paperwork they can often come associated with the medical and prescription expenses. That just adds to the situation. And so we’ve spent a lot of time thinking about that and how can we better position again, employers and their employees and family members to avoid that.
Ryan: Got it. So it sounds like there are a lot of different levers you can pull, if you will. A lot of different decisions, we can make different things we can do. You’ve mentioned some industry-specific terms. I think you said first dollar benefit. You talked about some of those things. What are some specific examples that you’ve seen, like maybe a story you can share where someone was, they hired you, they started working with you and you were able to just do something so radical, but it was just by pulling one of those levers, but the bottom line, like they really felt it. It really impacted them in a big way.
Keeping a Relevant Scorecard
David: Yes, absolutely. So there’s a number of examples, but one organization, in particular, asked us to come in and have a conversation with them. And it was a, internally, they did an annual survey with their employees. And the employees had a chance to share with them the different aspects of the company and their position. And, you know, what was working for them. And then other areas that were a real concern, well, when it came to the benefits component, the scores were exceptionally low.
An area that wasn’t serving the employees well, and it was harming the company. And part of our discussion was to, you know, our commitment to them was to turn that around and improve that score. So, you know, and a very low score in the year before, we said, a year from now, we’re gonna come out and we’re going to do that assessment again. We’re going to do that employee survey. And we actually put, you know, some of our fees at risk to say that we’re so confident of the result here, that that score is going to exceed a certain percentage.
You know, that If it doesn’t, then, you know, we’re willing to put that on the line. That score ended up in the high 90s the following year and it has remained there ever since. So, again, this is, you know, it’s kind of interesting when I meet with employers and I hear their stories that they share with me, of where they’re at and their frustrations and concern for their organization, you know, I know what I know, I know what we can do for them, I know we can deliver for them, and the improvements that we can bring to them and their future.
And that’s, you know, that’s what motivates me to have those opportunities, to have those discussions and ultimately to determine, you know, if it’s a good fit for them. You know, they’ll make their own informed decision after that discussion. But I know what’s possible for them, and be happy to share with anyone, you know, just example after example of all the results and impact that we’ve been able to do and help, you know organizations over the years.
Jeremy: You know, David, I can personally give you a testimonial. I know you’ve worked with some of my clients in the past. And first of all, the benchmark survey was fantastic. You know, we’re all trying to compare what’s going on, what are our competitors doing.
And that was just, I remember one of my clients coming in and just sharing how much peace of mind they were once they could look at all of it, not just the health care, you guys were looking bigger than that. And they could just say, Okay, we have a full package here. We know that we’re offering a solid package, they became more confident. And then they were wowed that you saved them money on top of that. And I believe you put some of these health initiatives in place.
You know, in the blue color, we’ve all been doing workers comp type safety programs because we understand we can control our safety exposure. We do the right safety practices, we prove it to our insurance companies our eMod goes down. And when I was running the Structural Steel Company, that employer modification was almost a strategic advantage. We could outbid other competitors because we were saving enough money. And I know you can drive those same results.
Actively Working to Keep Costs Low
David: Oh, yeah. Perfect examples. So, you know, that makes logical sense, right? You know, if you have, if you’re lowering your worker’s compensation, you know, eMod, you’re going to have lower insurance costs because you’ve improved the, you know, the risk of your organization. Unfortunately, that wasn’t the experience on the health insurance side.
Everyone kind of started in the same place. If you think of that just, you know, without going too deep into the way that the structures are done, but you could be an employer that’s, you know, have the healthiest group in the world in certain segments and you’re going to be treated just like a, you know, any other groups. You could have a comparison of groups that are exceptionally healthy, well and other groups that aren’t and they all kind of start in the same spot. We just thought that that just wasn’t right or fair, made no sense, was not logical.
So we said, Well, how do we take those concepts of other areas, other parts of the insurance industry in terms of risk and reward and how do we put those into programs for our employers. You know, if they participate, if they do certain types of activities and initiatives, they should benefit directly as a result of that. And we say benefit, benefit, financially, benefit from, you know, improved future renewals and also the impact in terms of culture in your organization.
You know, reduce absenteeism, presenteeism, greater productivity. There’s a lot that comes along with shifting that direction, but exactly to your point, that just makes sense. People get it, they say, Okay, if we do this, we should expect our costs to be lower. And the answer is yes, absolutely. So that just makes good sense. People get it. And they’re willing to do that as long as they know that they will get the result that they were promised when they do that.
Jeremy: I love this. You know, my clients are always, we teach a scorecard and they’re tracking their numbers and making sure that they’re actually driving tangible results. And like you said earlier, digging down to the root cause of why they’re not getting the result they’re not getting that they want. And I love the fact that you’re bringing that same kind of accountability, discipline that we put in all the other areas of the organization, you’re able to bring that, come up with good strategies for the bottom line and for building a great culture.
You know, Ryan’s constantly, Ryan helps build that employer brand and make sure that we have that bench of A players. And now when you have the right offering with the complete package, it makes it so much easier. And, you know, that’s just the icing on the cake. But it’s just nice to do that. And I love hearing that we can do that without increasing costs.
As we come to this next section, there’s one thing I would like to, I want to, I know you’ve used it a couple times like hey, I don’t want to dive too far in the weeds. I want to just bring it down into the weeds a little bit because I know you got some really good ideas and some actual things. What are maybe a couple things that we should go back and look in our business and just say, if these things are out of place, we probably should dive into our health care. What are maybe a thing or two that we should go look for?
David: Yeah, absolutely. So I would say that, first and foremost, to get a sense of, you know, where you are. So, you know, employers as a best practice traditionally, you know, if not every couple years as part of their due diligence, they’ll say okay, well we’re, you know, have our insurance coverage or policies with, you know, different companies.
And maybe they do an evaluation on say, Okay, well, what would it look like, you know, if we, you know, what are other companies offering in terms of the benefit and the cost? And that’s kind of the transactional commodity aspect of that analysis, which is absolutely, you know, the right thing and it’s needed and it’s necessary and that’s something we do for our clients. But again, that’s more transactional, more commodity-based.
And then there’s the transformational aspects. And that is to say, Okay, let’s find the right partner aligned for you. Let’s make sure that your plan design, let’s make sure that the pricing is fair. And then also, you know, going forward, what are the strategies that we’re going to implement and put in place for your organization and your employees to maintain and improve the insurance spend and, you know, with regards to this example of the health insurance spend.
So, you know, those are the types of things that we do. And I also have to say, you know, so in terms of motivation, you know, this is the stuff that just fuels us. You know, so I’m very fortunate to work with a group of individuals that are caring and compassionate. They’re motivated every single day by just being obsessed with how do we make that experience better for our organization, the employers that we work for, for the employees and all aspects, you know?
So simplifying education, awareness, communication, when services are needed, so that it’s a pleasant experience, and it works the way that it should and that we’d all expect it to. Unfortunately, you know, if that’s not something that’s being proactively managed, the outcome can be quite different. And it can be also, you know, very frustrating and it can cause a lot of issues. So, yeah, again, I’m just fortunate to work with so many brilliant people in all levels and in all aspects who are just, you know, motivated day after day and focused on those results and delivering those types of experiences for our clients.
Jeremy: Well, David, I know that you do this day in and day out and I know that you do it well. I believe you have something to give to our listeners. Share that with us.
David: Yeah, absolutely, Jeremy. So as I was mentioning, you know, earlier in the conversation, is the ability for, you know, employers that they say, hey, we’d like to get an understanding of how we aligned. So as much mentioning a few moments ago, you know, part of the due diligence process is, you know, evaluating, well, if we were going to be with ABC company or XYZ company from the insurance standpoint, that’s important, right?
So that’s on an individual level as an organization. But, you know, the question also is, well, how does your program though, compare with other employers that you’re fighting for talent with? Maybe, again, maybe it’s just the overall marketplace of all employers, maybe it’s specific to your industry, maybe it’s specific to your industry shape and size.
You know, so we’re able to drill that information down and actually give you credible information to show you, you know, what are the average deductibles or physician copays or prescription copays? What are the average premium costs? What are the payroll deductions? You know, the employer contributions. You know, all these very critical components that, you know, the executive team is looking at trying to make the best-informed decision to get their benefits in place, again, to serve their employees and, you know, and maintain the strength of their organization year after year or improve upon it.
So that’s something that we make available to, you know, any and all employers if their wish to have that analysis done for them to receive those results, it is our pleasure to do that. And again, I just want to emphasize that there is absolutely no cost or obligation. So we will provide that to any employer, any of your listeners to the podcast. Be happy to deliver it to them. And then, you know, if they wish to have additional conversations with us, we’d be delighted to be at the end of that, you know, discussion, if you will.
Jeremy: Perfect. So David, where can they go? Who should they reach out to, to get that data? And guys, those that are listening, the data is amazing. So where do they go get that?
David: Yeah, so for the listeners or the Blue Collar Culture Podcast, I’d say they can reach me directly by email. My email address is my first name [email protected]. You can also find me on LinkedIn. David Spellicy. Last name is SPELLICY. And I’d be delighted to have a conversation with you, tell you, you know, how we can prepare that information for you, share it with you and help you improve your, you know, your situation for your organization or, you know, and of course, your employees and their family members.
Jeremy: Well, thank you so much, Dave. This has been a great time. And for all the listeners out there, just go email David right now. [email protected] and get that free benchmark survey. Know how your competitors do and how you’re ranking and all that. David, thank you so much for being with us.
David: Jeremy Ryan, thank you so much. Absolutely my pleasure. And thank you for the great work and the service that you provide through your outstanding podcast.
Ryan: Thank you.