Employee health insurance plans Featured

11:05am EDT June 30, 2006
As health care costs continue to rise, health care providers must find different ways to set up programs for employers so that both the company and its employees can afford the package.

“The biggest change in the last two decades is the cost of health care coverage,” says Jeff Ray, director of sales for AvMed Health Plans. “Medical cost inflation has outpaced pretty much every other component of the economy.”

Smart Business spoke to Ray about how health care providers can work with employers to offer affordable health care packages.

How has health care insurance changed over the last 15 years?
The biggest change is the cost. The Medical Cost Index has increased far above the Standard Consumer Price Index, and costs have soared.

There are a couple of reasons for this, and a primary one is technology. For example, 15 years ago CAT scans and MRIs were just starting to come into play while the standard diagnostic tool was the X-ray, which may have cost around $25. Today, CAT scans cost $1,000 or more.

Another component is the cost of pharmaceuticals. With the wide array of new products that the pharmacy companies have brought onto the market, pharmacy costs have escalated.

In fairness, the quality and favorable outcomes of health care in this country have increased as well, due to the technology and the innovative solutions the pharmaceutical companies have brought forward, such as the wide array of maintenance drugs to control things like hypertension and diabetes.

Cost has an influence on what types of benefits employers are able to offer their employees. Fifteen years ago, you were either in an indemnity product with low deductible and low out-of-pocket costs or you were in an HMO that had low or nominal copayments. These days, it’s not unusual to see a $25 physician office co-pay, $50 for a specialist and 3-, 4- and even 5-tier prescription drug plans.

From an employer’s standpoint, the array of health insurance products is complex. It’s difficult to navigate through all of the options, which is why we feel using the services of a professional insurance agent or consultant is in everybody’s best interest.

Can any of the high costs be offset?
Employee contribution has increased as well as out-of-pocket expenses. In our industry it’s called cost shifting, because the employer shifts the costs to the employee — and we believe that amount is at the maximum level.

One of the ways to help control costs is through medical management solutions, which consist of a team of physicians and nurses who help employees with acute conditions navigate through their course of treatment or the health care system in general. We use sophisticated predictive risk-modeling software to help show employer groups where they might find simple employee health improvement courses, such as smoking cessation or weight control programs.

Is there a mandated amount companies must pay into their health care programs?
In Florida, small groups (2 to 50 employees) have some protection under state legislation with guaranteed issue coverage and mandated coverage for certain benefits. All plan designs must be filed with and approved by the state.

For a larger company (more than 50 employees), there are no such mandates. Employers can basically offer whatever they want. Each state has its own set of regulations.

Do companies use health care packages as a recruiting tool?
During a robust economy, employers would use their packages to not only recruit but to retain their best employees. In times of a more challenging economy, companies pay more attention to their bottom line and might offer a dual option: a richer benefit plan alongside a standard benefit plan. The company will provide a contribution for the standard plan; the richer benefit becomes a buy-up for the employee to pay more out-of-pocket costs. You can pick which program you want, but have to pay accordingly for it.

What is the biggest health issue in America today?
Obesity — and it’s not just a weight issue. It is a health problem in terms of the additional complications it causes, like early-onset diabetes, hypertension and other health implications. Studies suggest obesity will have the largest impact on the cost of health care unless we can figure out a way to solve the problem.

It’s a problem that will have to be addressed on an individual level. I can make a speech about a healthier lifestyle to a crowd of people and nobody will think I’m talking directly to him or her. We need to work through the employers and provide assistance with onsite education and health and wellness programs such as onsite diabetes and hypertension screenings.

JEFF RAY is director of sales for AvMed Health Plans. Reach him at (813) 288-3320 or Jeffrey.Ray@avmed.org.