Do you really need to outrun the bear or just be self-insured?
Stop and take a breath because if the term “Self-Insurance” made you stop breathing, you need to relax and keep reading. The purpose of this post is to introduce you to a concept, not to get real technical. I will get technical in future messages.
There is an old joke that goes like this. Two guys are camping and one of them sees a bear coming into the camp. He begins to put on his running shoes. His buddy says “Why the shoes…you can’t outrun a bear?” The guy with the shoes says “I don’t need to outrun the bear I only need to outrun you!”
So, you might now be asking, how does that relate to being self-insured?
What if this year, your medical plan did not have a rate increase but all of your competitors saw 10% to 45%? That might be between $30 and $135 per month, per employee assuming an average cost of $300 per employee. Would that give you a competitive edge?
What if next year you only did that same thing? What if you actually reduced this cost?
Just being partially self-insured cannot guarantee you will not see cost increases, but it will give you the tools to set that goal and then work to achieve it.
You need to start by understanding a common business axiom – You cannot manage what you cannot measure! Partial self-funding is about getting the data (claims detail) to manage one of your largest variable costs.
Plan claims data gives you the information you need to manage the plan risk – it is your running shoes that allow you to “outrun” your competition. So, if you have not been looking at partial self-funding, you need to at least ask the question, or the bear may be coming for you.
Contact Bill Weaver with any questions, 602-381-9900.