Benefits consortia, buying groups and co-ops are helping employers to keep health insurance premiums at a manageable level.
The idea is to create a larger pool of people to be insured, which reduces the per-person cost of coverage.
"By forming buying groups, employers are able to increase their individual buying power," said Paula Bilitz, director of group life marketing for the Minnesota Life Insurance Company in St. Paul, Minn. "The economies of scale also apply to processes and information sharing to increase efficiency and reduce waste in administering employee benefits.”
While membership in a buying group can reduce the complexity of providing benefits to employees, it doesn't give member companies the luxury of putting their programs on auto-pilot, according to Minnesota Life. The differing requirements of member organizations and the ever-changing regulatory environment force employers to stay vigilant and ensure specific needs are met.
"Employers and their benefits brokers need to remain involved in the buying process, especially during vendor selection and plan implementation," said Bilitz. "Still, for many companies, buying groups make it easier and less costly to provide benefits for valuable employees."