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.
“Wellness programs are on the rise, but they are also one of the first benefits to be cut when times are lean,” says Bethany Thayer, manager of worksite health promotion, Henry Ford Health System. “This is because the plans were ill-planned. Partner with your insurance provider to get tips and information on your employees’ most common claims.”
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.
“Make sure you know what your savings expectations are,” says Cindy Bjorkquist, director of wellness and care management consulting, Blue Cross Blue Shield of Michigan. “Discuss your expectations with your insurance provider and see how they can help you get there. Start with a health assessment survey for employees, which they can provide.”
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 risk appraisal typically looks for five common chronic conditions,” Bjorkquist says. “Have noncompliant employees pay a higher health insurance rate. You can discuss with employees what plan you will switch to if there isn’t a health improvement in the population after a wellness program is presented. Give them the option.”
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.
“You can pass on premium surcharges to noncompliant employees, which takes the pressure off of you,” Bjorkquist says. “Many companies change to a plan with a less costly premium and try wellness initiatives. What they don’t know about is the options that are offered free online or with their health care provider. There needs to be an open line of communication with the insurance provider to get the most out of your benefits.”
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.
“Build awareness of the health issue through employees’ health risk assessment,” Thayer says. “Then you need to keep building the culture of wellness by having healthy foods available for employees and participate in the program yourself.”
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.
After you’ve determined a health awareness focus for your employee population, you can create a plan of action.
“Get rid of junk vending machines,” Thayer says. “You can’t support a culture of change and have bad food around. It’s not difficult to swap sugary foods for fruit or something less detrimental to the efforts.”
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.
“If you’re asking your employees to do more and more because of your downsizing, you need to make sure they stay healthy,” Thayer says.
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.
“Quantify your outcomes,” Thayer says. “Have lunch-and-learn sessions, provide flu vaccines and have periodic health screenings performed. This will eliminate your future health care anxieties or at least reduce them.”