The annual loss ratio for a company’s health plan is 158%. The CHRO has been asked to propose…

The annual loss ratio for a company’s health plan is 158%. The CHRO has been asked to propose changes to the plan that will lower costs while retaining as many of the current benefits as possible. A review reveals that the dental and prescription drug coverage account for 84% of the plan’s claims and that 3 of their 91 employees account for 73% of the claims.After reviewing available options, the CHRO decides that the best option is a plan that doubles the deductibles on dental and prescription benefits and lowers maximum reimbursement coverage by 25%. The CHRO presents the suggested changes to the company’s executive committee. After a brief discussion of the rationale and the merits, the COO mentions that the company should announce the plan’s changes immediately. The CHRO responds that doing so would defeat the purpose of the changes. The executive committee proceeds to vote and accept the changes to become effective upon plan renewal the following month.
Why would announcing plan changes to employees in this way be problematic?
Answers
It would be inappropriate to announce any pending policy changes until they become official and are implemented.
The plan’s normal renewal date must be allowed to transpire in order to verify, without bias, that yearly use rates are in fact occurring naturally.
The terms and conditions of a benefit provider require a blackout period to avoid insider information about the change being leaked.
Incentivizing use just prior to a change could increase the loss ratio even further, requiring even more funding adjustments to make the plan sustainable.