Those living in the southern United States likely know about kudzu. For those that don’t – kudzu (pronounced kud-zoo) is a a semi-woody, trailing or climbing, perennial invasive vine native to China, Japan, and the Indian subcontinent. Kudzu is also known as foot-a-night vine, Japanese arrowroot, Ko-hemp, and “the vine that ate the South.” It was first established in the U.S. in the late 19th and early 20th century to help with erosion control. But left unmanaged, the vine now covers large swaths of natural habitats and has actually been detrimental to many native plant communities. As stated from one source, “it can crowd them out; it can outcompete them; and it can physically crush them.”
Interesting. This description may apply to your employer-sponsored health insurance plans contracted and managed through very large carriers. First established to address a problem, such legacy plans are often deeply embedded within the fabric of many businesses and are now materially impacting the financial performance of those employers. And sadly, continued renewal in these plans result in higher costs, reduced choices, and lots of frustration for employees and employers alike.
Here’s a basic example of how your traditional health insurance plan can be like kudzu:
- Your business employs 100 people, and five years ago, average monthly premiums per employee were $1,500.
- With “modest” annual premium increases every year of 5% – your average monthly premium per employee now is $1,823.
- And 15 years from now, that number will have grown to a whopping $3,790 per month per employee.
All from an unmanaged, unchallenged, “modest” annual premium increase of 5% per year.
From this example, your employer-sponsored health insurance plan will have experienced more costs of almost $2 million from those “modest” annual premium increases. $2 million is a lot of money for a 100-person business. What could your business have done with $2 million more in positive cash flow? Lots of things. But left unmanaged, the cost of your health insurance plan – with a large, traditional carrier – has grown … “a foot-a-night” … kinda like the unruly Kudzu vine.
Annual enrollment may be several months away. But you can take steps now to stop the “modest” annual premium increases. It’s starts with a simple call. Contact us to find out how we can help.
