C ommunication, creativity and a willingness to venture into new territory will play a critical role in employers’ efforts to reduce health care costs in 2011.
Employers such as Radnor, Pennsylvania-based VWR International, a global distribution company of 6,500 workers, are taking proactive steps to combat a forecast of an 8.8 percent spike in health care costs—the highest increase in five years, according to a 2010 study by Aon Hewitt.
Director of benefits Laureen Quinter says the firm’s strategy is to focus on wellness and prevention instead of cost containment and plan design.
“We did increase the copay on brand-name prescription drugs and changed the fees for emergency room services to minimize inappropriate use but didn’t alter our deductibles, other copays or coinsurance,” she says.
Instead, Quinter launched a wellness campaign last fall, holding employee meetings to explain the cost-savings incentives that VWR is offering. Workers who complete a health assessment and undergo biometric screenings (blood pressure, body mass index and a cholesterol check) can cut $10 off their monthly health insurance premium, and it doubles if their spouse participates.
Additional savings are realized if the employee’s tests indicate good health. Going forward, workers can receive credits for improving upon the prior year’s results.
“Our goal is to identify health conditions before they become a problem,” Quinter says. “We are helping them to become better consumers of health care by giving them the tools and information they need to make informed decisions.”
Quinter’s team, including a dedicated wellness and education manager, is committed to integrating good health into the corporate culture and developing Web-based education components that will roll out later this year.
Wes Dyck, director of personnel for Washington-based conservative think tank the Heritage Foundation, says his organization, which self-funds its plans, increased the office visit copayment from $20 to $25, raised its out-of-pocket maximum and boosted the monthly premium to bring a forecasted 24 percent increase down to 17 percent.
“With the new law, we can’t do some of the things we normally do to encourage efficient use of our health care dollars,” Dyck says of the organization, which employs 250 people.
At Cincinnati-based TCI, a full-service billing company with 100 employees, biannual educational sessions regarding its consumer-driven health plan and health savings accounts are complemented with cost-saving successes of employees shared by e-mail and word of mouth.
“Employees need to fully understand how these plans can reduce the cost of health care to both the employee and the employer,” says president Jeffrey Rinear. “Our employees are engaged in the idea of being wise health care consumers and understand the tax benefits and saving component of HSAs.”
Mike Barrett, president of BBG, Inc. a Valley City, Ohio, benefits administrator, says he believes it’s cost effective for clients to use high-deductible plans and fund the difference between the previous and now higher deductible, or self-fund portions of their plans. For example, he explains that an employer might pay $200,000 a year in premiums for a “fully loaded” plan but can fund a high-deductible plan for half that cost.
“Even if they fund the deductible gap for employees, they can still save 20 percent,” he notes.
Barrett Benefits Group encourages employers to offer a wellness component as part of their plan and to work with local physicians to sponsor on-site screenings. He says many physicians will provide an aggregate report that protects confidentiality but indicates the well-being of the workforce.
One of Barrett’s clients is Valley City-based Webb-Stiles Co., a conveyor systems manufacturer. The company discovered it was far more cost effective to purchase a high-deductible health plan and carve out the prescription drug plan. Webb-Stiles controller Jeff Twardzik developed a relationship with a local pharmacy willing to provide customized services to employees, who are charged a minimal $3, $5, or $10 copayment, which means the company pays most of the cost.
“We are helping the local economy, our employees are saving money, we’re saving money by self-funding one of the most costly pieces of our plan, and I’m getting great feedback,” he says.
Pete Villemain, president of Employee Benefit Services in San Antonio, says the self-funding of plans is gaining popularity.
“My philosophy is that if you are willing to invest five years in a self-funded option, then I believe you will save money,” Villemain says. “Once you have more than 60 employees, you should look into it because you gain control and flexibility over your plan design.”
Villemain adds that consumerism is important with health care plans that cover catastrophic needs while leaving the insured to manage the day-to-day costs.
Rusty Rice, Texas Association of Health Underwriters’ immediate past-president, agrees.
“We have moved full circle from the traditional indemnity plans that covered 80 percent of costs to HMOs that were practically free…and people stopped taking an interest in their personal health, which resulted in higher costs,” Rice says. “We must put more responsibility on the employee or health care costs will continue to spiral.”
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