Actuaries’ Advice: Don't Leave Money on the Table

Nov 10
Don't Leave Money on the Table: Self-Insurance Saves Money
Don't Leave Money on the Table: Self-Insurance Saves Money

Educational institutions with fully insured health insurance arrangements for their employees are leaving money on the table, according to Steven Keshner, Senior Vice President and Chief Actuary with Spring Consulting Group. Moving from a fully insured to a self-insured model creates the lowest possible margin for health plan administration. “By moving from a fully insured to self-insured arrangement, you retain any profits and gain claims transparency so you can bend the cost curve,” said Steven, who leads edHEALTH’s actuarial consulting team.

The pandemic has shined a light on the importance of shifting to self-insured arrangements as insurers report record profits due to dramatic drops in healthcare utilization while self-insured purchasers realize lower healthcare spending. A recent Employee Benefit News article authored by the President of MagnaCare concurs: “Self-insured plan arrangements are the best way to plan strategically for the long term, and the current environment is underscoring the need to transition.”

Self-insured arrangements are not without risk and stop-loss provides security. “edHEALTH schools pick their own stop-loss self-insured retention level based on their risk tolerance, philosophy, financial status, and experience,” said Steven. “The member schools own the health insurance stop-loss program, enjoy pooled rates, and share in any profit margins when the results are favorable.”

Nick Frongillo, Associate Actuary with Spring Consulting Group, points to three savings opportunities through edHEALTH:

  • Retaining stop-loss profits
  • Collaborating with other member schools on plan design and finding data-driven solutions that save money, such as carving out prescription drugs
  • Negotiating low administrative fees through the purchasing power of 23 colleges, universities, and other schools

Spring’s actuarial team works with current and prospective member schools and their brokers to model a variety of options, and make sure everyone is comfortable with the corresponding financial projections. “We work together with member schools – current and future – and their brokers to develop rates for a variety of options and plan designs, and explain these projections,” said Nick. “We also explain cash flow logistics and the structure of the captive.” Sometimes a fully insured carrier will come back with an attractive rate for a prospective member school to compete with the low quote they’ve received from edHEALTH. “edHEALTH is a long-term solution, and we offer advice to prospective educational institutions on how they will save money over time,” said Nick. “We collaborate with the broker so we can give them the information they need while providing a seamless and positive experience for the current or prospective member school.”

In addition to conducting pricing analyses, Steven’s team generates financial projections, actuarial reserve certifications, actuarial and reporting analytics, makes sure claims are paid correctly with funds available to make those payments, and assures reserves and other actuarial financial statement items are adequate. “We strive to make sure that the member owners and their brokers are comfortable with all the financial pieces,” said Steven. “Transparency is key, and we open up the black box to show every detail on premium spending.”

“I can’t say enough about Steven and his team’s responsiveness, accuracy, and collaboration with our board, member owners and their brokers,” said A. Tracy Hassett, edHEALTH’s president and CEO. “I liken their financial accuracy to landing a 747 on a postage stamp.”

Steven Keshner

Steven Keshner began working with what became edHEALTH in 2009, when The Boston Consortium, which brings together Boston area colleges and universities to develop and implement cost saving and quality improvement ideas, gathered a group of chief financial and chief HR officers to find out how to slow health insurance cost increases. He and other members of the Spring Consulting team recommended the captive solution to the advisory committee, helping to launch edHEALTH in 2013 and grow it since then. He has over 25 years of actuarial, financial, underwriting, and strategic insurance experience with a group life, health, and pension focus, and has worked for Spring for over 11 years. Prior to joining Spring, Steven was the Senior Vice President, CFO and Chief Actuary of Nippon Life Benefits in New York, a subsidiary of Nippon Life Insurance Company, a global mutual life insurer. 

Nick Frongillo

Nick Frongillo has worked with edHEALTH since he joined Spring Consulting six years ago. He develops working rates for medical claims, stop-loss premiums, and third-party administrator administrative fees. In his position, he provides a variety of actuarial functions including pricing, reserving, valuations, business development, financial projections, underwriting and financial analysis. He is the primary actuarial point of contact for current and prospective member owners and their brokers.

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