A Company in Crisis

In 2014, a midsize employer in rural Missouri hit a crossroads . . . or perhaps a brick wall.

After several years of battling increased taxes, government-mandated changes, and double-digit increases in medical costs, the company’s medical plan costs were expected to increase again . . . this time by $1 million.

Even if the employer increased its contributions to the plan by $700,000, employee contributions would still have to increase by 23 percent.

Making the Move

With the help of Lockton’s Kansas City Benefits team, the employer made a bold decision, moving all of its 1,350 employees from a traditional PPO health insurance plan to a reference-based pricing model.

In the first year of the reference-based pricing model, the company promised—and delivered—incredible results:

  • Deductibles stayed the same.
  • Coinsurance rates stayed the same.
  • And instead of a 23 percent hike, premiums did not increase at all.

Here is the story of how one employer fought back against rising healthcare costs, the status quo, and that law known as health reform…and won.

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