Every organization struggles with the high cost of insurance, especially healthcare. The challenges of funding health care have increased significantly over the past few years for many American businesses due to the implementation of the Affordable Care Act.
Universities, colleges and other institutions of higher education are under even more intense scrutiny as the cost of education continues to climb. This has left administrators scrambling to find more creative and efficient ways to fund their employee benefits.
To design an efficient and effective stop loss funding vehicle for a higher education consortium already in collaboration for other joint purchasing and educational initiatives.
See Also: Solutions for Educational Institutions
Spring has been working with a large group of institutions of higher education to pinpoint opportunities for greater healthcare program efficiency and savings. We conducted a thorough feasibility study to identify appropriate funding structure(s) that would meet the goals set by the consortium. From the results, the group determined that the best course of action was to implement a Vermont-based captive insurance entity for medical stop loss risk sharing. In tandem the consortium, in collaboration with Spring, developed common plan designs and established a core process framework. Each entity within the consortium provides a self insured health plan with pooled risk sharing above a specified threshold.
A new organization as well as a Vermont based stop loss captive was formed to achieve these goals. It was launched on July 1, 2013 with a core of six colleges and universities participating on day one.
The new organization was developed based on the belief that collaboration among best in class institutions would create a mechanism for leveraging economies of scale to significantly improve health care buying power, provide efficiency in program design, administration and funding creating a platform for true population health management based on the needs of its members; it has certainly accomplished all of this and then some!
At inception the consortium had 6 member schools. The number of entities has doubled in two years and represents 9,200 members. Collectively, working rates have increased by 1.9% over two years compared to a medical trend of 7% – 8%. In addition, on top of the tightly controlled rates, 2% of total working premium was returned as savings to members.
As this organization enters year three, it is strong and has set very ambitious goals. The member institutions are focused on furthering their strategy to provide quality care with more participant involvement. In addition further collaboration on disease management, wellness and RX costs are on the short term roadmap in order to support an effective and healthier workforce.
This group approach is a truly groundbreaking solution in an industry where each college is unique with very specific human resources expectations. The success in year one of this new organization has made it a trailblazing model for the higher education community and other similarly situated industries, going forward.
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