Human Resources
Health scare
Small changes can curb health care costs.
By Morgan Lewis Jr.
Smart Business Cleveland | August 2003
Newspapers across the country in June picked up on a study released by the Center for Studying Health System Change which reported that health care spending had actually slowed from the previous year -- just barely.
The average American spent 9.6 percent more on health care in 2002 over the previous year. Last year's study reported Americans spent 10 percent more on health care in 2001 over the previous year. A fourth-tenths of a percentage point decrease in spending was deemed worthy of the front page.
The news was of little comfort to Jack Schron, president of Jergens Inc. in Cleveland. His machine tooling shop was forced to change its health care provider for the third time in five years due to a dramatic increase in premium costs. He won't reveal the exact increase, saying only that it was "double-digit plus."
"It's a complete wild card," Schron says. "Do you budget for 2 percent or do you budget for 25 percent? ... It's enough to choke a horse."
Schron's woes mirror those of the employers who responded to the Smart Business Network/Employers Resource Council Workplace Practices Survey. The cost of health care was the third biggest challenge facing employers, according to the survey; last year, it was ninth.
"We wrestled with a whole series of options," Schron says. "The two biggest were, do you change plan design and stay with your current carrier so you don't have the disruption, or do you go out there shopping and seek other quotes?"
Over several days, Schron met with his employees in groups of 20 to talk about the health care issues facing his workers. Based on those meetings, and after receiving quotes from several carriers, Schron decided to switch providers, a change which required employees to switch to a new network of hospitals and doctors.
Other changes Schron has made over the years to help curb costs include:
* Mail order
According to the Center for Health Service Change study, spending on prescription drugs rose 13.2 percent last year, contributing 22 percent to the overall spending increase. One way Jergens is trying to curb costs is by offering a mail-order prescription plan.
"You can get three months of prescription for the price of two from a regular pharmacy," Schron says.
* Options
With its new carrier, Jergens offers a two-tiered plan to employees. The top tier includes higher benefits with higher employee contributions for those who need more health care services. For employees who don't require as many services, the second tier includes a high deductible and co-payment but a lower employee contribution.
"The employees then make a value judgment as to which way it makes the most sense for them to go," Schron says. How to reach: Jergens Inc., (216) 486-5540 or www.jergensinc.com
