Medical Mutual maintains affordable benefits Featured

8:00pm EDT May 26, 2009

Revenue is down, the budget has been hacked away and now you’re edging toward reducing employee health care coverage — or even eliminating it outright. Before taking action, take into account the short-term benefits and long-term effects of your options.

A knee-jerk reaction may be to shift the benefit burden to employees. But those who have been down that road, say there are ways to take a strategic approach to generate value from a shrunken budget and employee pool. The most successful organizations over the long-term will be the ones that cut costs now, while improving the health of their employee populations.

Utilize existing resources to find out how you can save money, starting with your health insurance provider.

“Ask your insurance company to provide you with employee health evaluation surveys,” says Perry Braun, market leader, large group market, Medical Mutual. “Insurers can help you conduct surveys to determine how your individual employees view themselves and then how you can make use of that information.”

Awareness of the claims filed by your employees will allow you to determine the best health plan move that will work for their needs and devise a health promotion program that will be most appealing to them. While moving to a lower-cost plan may be a necessity, it is a temporary fix and should be complemented with an emphasis on health that will have a more lasting impact.

A 2009 Watson Wyatt report shows that 67 percent of employer respondents to an Annual National Business Group on Health survey say the top challenge to maintaining affordable benefits coverage is employees’ poor health habits. Only by managing these habits can you truly get your costs under control.

Work with your provider

Work with your health insurance provider to decide what the best options to your budget will be. Negotiating rates with insurers isn’t usually effective, as insurers aren’t offering massive discounts because of the economic downturn. The option you usually have is a different plan with reduced coverage.

One option is cost shifting to save the company money while increasing the cost to employees. But altering plans and shifting costs to employees isn’t solving the problem of high premiums. A Hewitt Associates LLC executives’ survey shows that participants found cost shifting didn’t bring out desired behavior changes in employees and that an emphasis on health at the workplace is needed.

Another money-saving health care option is risk sharing.

“Employees have to feel their health is their responsibility,” says Roger W. Sims, director of compensation, benefits and employee health, Health Alliance of Greater Cincinnati. “The cost of their health insurance will go up if they do not do their part to be healthy. Let employees know you are doing your part by paying premiums and giving wellness directives. With encouragement you will get participation. You can also give discounts to nonsmoking employees as an incentive to quit.”

A third option is a health savings account, which takes money out of an employee’s check pretax and the employer has the option of adding money to the account, as well. If the employee switches jobs, he or she will take this health savings plan to the new position and the employer will retract its contribution from the fund.

“A health care savings account can be portable and taken with the employee when they leave or an employer can add to the account and deduct their contributions when the employee leaves the company,” Braun says.

While health promotion — or wellness — programs aren’t usually at the top of the list when contemplating short-term health insurance savings, a program will have positive results in the short term with the best outcomes in one to three years. Companies that effectively promote health see immediate savings in premiums of 10 to 13 percent with the potential of reducing future medical costs. The investment has a $3 to $6 payback on the dollar.

Your best bet to cut costs will be a two-prong approach. Change your health plan for instant budget relief and initiate a health promotion plan.

“People didn’t get overweight yesterday, so it will take time to change the behavior and bad habits that got them there,” Sims says. “It will be worth it in the long run.”

Design your health awareness plan with consideration of the number of employees that will be participating. A smaller company of 50 employees or less shouldn’t invest more than $25 per employee initially, but should focus on raising awareness by providing educational material that emphasizes preventive care, proper nutrition and health-related Web sites.

A midsized company of 300 or more employees should invest about $90 per person. Providing educational tools, focusing on the population’s main areas of concern and taking a competitive, fun approach is effective. A large company with a willingness to invest about $240 per employee can have a comprehensive program that includes education, financial incentives, the inclusion of spouses and perks like gym memberships.

Your insurance provider may have free online health risk assessment surveys. By surveying your employees you can determine ways to meet the company’s and employees’ financial needs. Ask questions about physical activity, stress management, tobacco use and general disease risk factors.

“Savings will come over time,” says Laura Robinson, wellness coordinator, business health, St. Elizabeth Medical Center. “Having screenings will show employees health stats they otherwise may have not known about. This can help prevent the onset of disease.”

Discussing what your insurance company provides to you at no cost or at reduced rates is a great first step. Many employers are unaware of fringe benefits included in their plans. If the insurance provider doesn’t offer what you need for free, it should be able to direct you to an organization or local hospital program that does.

The process

After you’ve determined a health awareness focus for your employee population, you can create a plan of action.

“You have to help employees get rid of the day-to-day baggage they carry around,” Robinson says. “Creating a culture of health will not only promote any health programs you start but will help relieve employees of stresses when they participate.”

You also need to make an assessment of your workplace wellness environment. Identify strengths and areas that need improvement. Enforce no smoking on the campus; provide healthy choices in vending machines and the cafeteria.

“Employees may have trouble focusing at work,” Robinson says. “This can have everything to do with having a sugar rush, then quick depletion of energy. Provide healthy food alternatives in the office.”

Provide health tips, programs, discounts to gyms and other information through multiple delivery sources. Some employees are more receptive to e-mails or newsletters — or they just need to hear the same message multiple times to get motivated into action.

“Many believe the dollars are soft from wellness programs,” Sims says. “But they do come. Wellness programs are part of the solution to high health cost problems. No matter what options employers choose, if employees don’t take care of themselves, everyone’s costs will be higher.”