For years now, employers have been
challenged to balance the ability to
provide adequate health care benefits with the ability to pay for them. As the
costs of health care premiums continue to
skyrocket, it is even more important that
employers are efficient when they purchase health care benefits for their
employees.
“Historically, employers have been challenged by health care costs, and that challenge has been exacerbated by the current
economic situation,” says Marty Hauser,
president of SummaCare, Inc. “We have
this perfect storm coming together, and
we also have the potential for changes
due to the election, but the problem still
centers around the issue of cost.”
Smart Business talked to Hauser about
how employers can help control costs
through prudent health care spending.
What should employers do to contain costs?
Most employers should use a broker or
consultant who can provide an independent perspective of a company’s situation.
They can help you do a market check to
look at the marketplace from a competitive pricing perspective, as well as to see
what types of changes are occurring in
plan designs, deductibles, co-pays, etc.,
because there are lots of options and new
products being introduced.
One word of caution: If you hear about a
deal that is too good to be true, it probably
is. As most carriers are competitively
priced, if one plan sticks out as being
priced way below the others, make sure
you are comparing apples to apples. Look
to see if the coverage levels are the same
in the plans you are comparing.
Also, sometimes a carrier will price its
services low in order to increase its market share. The problem with this is the
price always averages out over time, so
you should decide if you want to take a
very low price in year one, knowing that
the price may go up dramatically in the
following years. It’s best to deal with carriers that provide consistent, predictable
rates and avoid the roller-coaster ride of
unpredictable premium increases.
In addition, the recent focus of health
care has expanded from basic wellness to
disease management and chronic care
management. By switching from carrier to
carrier, you may sacrifice the work being
done with your current carrier and
employees in these areas. Continuity with
a carrier ultimately results in better care
for the employee at a lower cost.
Employers may also want to consider
‘buying down’ benefits at renewal.
Consider purchasing a plan with higher co-pays and/or deductibles, because sometimes a very subtle change in a plan’s copay can result in significant savings. In the
past few years, the common deductible
has doubled from $500 to $1,000. This is
reflective of employers buying down on
their benefits, but still being able to offer
comprehensive coverage.
What about cost-sharing benefits and plan
design?
By shifting some costs to the employee,
employers can recognize significant savings and employees become more engaged in their health care decisions.
As flexible spending accounts (FSAs)
become more popular, employees are
able to take advantage of tax savings
while preparing for more cost shifting in
their direction.
Also, do not ‘over buy.’ Look for plans
that offer rich benefits, but still have
some element of cost-sharing, such as
deductibles and co-pays.
More employers are also offering two
plans through one carrier. One option is
generally deemed the core plan where
employees contribute less money, but pay
more for deductibles, coinsurance or co-pays. The second option may be a richer
plan where employees contribute more
money, but enjoy lower deductibles, coin-surance or co-pays.
What do you consider to be the most important factor when selecting a carrier?
Education and knowledge are the fundamentals of controlling health care costs.
There is a huge responsibility on both the
employer and the carrier to make sure
there are clear materials available so
employees can maximize the use of their
benefits. Before selecting a carrier, know
what the carrier’s long-term commitment
is to educate employers and employees
on disease and chronic care management,
wellness and other programs.
It’s also essential to select a carrier who
recognizes the importance of wellness in
the workplace. Not only will creating a
focus on wellness make your employees
healthier, but employers benefit twofold
in creating a healthier work force that will
reduce utilization and result in lower premiums and lower absenteeism.
In the next issue, we’ll offer advice on
how to implement successful wellness
programs in the workplace and keep your
employees engaged.
MARTY HAUSER is the president of SummaCare, Inc., a provider-owned health plan located in Akron, Ohio. SummaCare offers a full
line of health plans and ancillary products. Through its extensive network of more than 7,000 providers and more than 50 hospitals,
SummaCare offers coverage to more than 115,000 members throughout northern Ohio. Reach him at [email protected].
