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MOCHA to Go

Tuesday, October 16, 2007
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In 2000, Hathcock was on the spot. Politicians and the public were turning their backs on HMOs -- a mainstay of Humana's business -- and the company was reeling. After a failed merger with another health-insurance company, Humana's stock dropped to $5 a share, from a high of $30.

At the same time, health-care costs nationwide were skyrocketing. Humana had to come up with new insurance programs for its customers. So it decided to start with its own employees -- to design a benefits system for them that could serve as a new-product model. Mike McCallister, who had just taken over as CEO, gave Hathcock the job of leading the effort.

Using the power of her office, Hathcock brought together experts from throughout the company -- actuaries, executives from product development, marketing, IT -- and formed a team to develop a new system. What emerged was a consumer-based plan dubbed "MOCHA" (More Options and Choices for Humana Associates).

Although the plan gave consumers more control, it also had a painful cost -- higher deductibles. It was up to Hathcock and her team to explain the changes to Humana's 22,000 employees.

Hathcock believes that companies should treat their employees respectfully, as adults, and she applied that philosophy with MOCHA.

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"We were totally honest with them," she says. "We said, 'Look guys, we have a problem. We can't sustain these costs year after year.' In engaging them in this way, I think it brought out everyone's best intentions."

Says Hathcock: "We tried to be emotionally intelligent in our approach."

Humana had expected to pay 19 percent more in the coming year to insure its employees, but under the new system, the cost went up only 4 percent. The plan was later rolled out for Humana's customers, and has been continually improved -- Hathcock's team is now developing the eighth version.

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