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.
“Work with your insurance provider and utilize its wellness program’s risk profile capabilities,” says John C. Caverno, chief human resource officer and senior vice president of human resources, Excela Health. “This will help you design and implement programs customized to meet your employees’ needs, such as fitness, weight loss, smoking cessation, etc.”
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.
“You can measure your employees’ workers’ compensation injuries, short-term and long-term disability claims, and absenteeism reduction when there’s good health initiatives and compliance,” Caverno says.
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.
“Insurance companies are reintroducing old plans all dressed up because of the economy,” says Fred Shugars, vice president of product management and development, Highmark Blue Cross Blue Shield. “What you really want is healthier people working for you.”
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.
“Give your employees health plan information so they can help choose the best plans for them,” Shugars says. “If you have employees’ risk profiles, you can pass on some fees to employees who have increased the insurance premium based on their risk characteristics.”
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.
“A health assessment gives you a benchmark to start from in measuring the success of any wellness program,” Caverno says. “Each year you can monitor your score to track your progress and continue to update your program to meet your employees’ needs.”
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.
“Creating a wellness program that starts with a health fair is a great way to get employees’ attention,” Caverno says. “It’s amazing to see how employees don’t receive their routine screenings or establish a relationship with a physician to monitor their health.”
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.
“Promote a culture of health,” says Rose K. Gantner, senior director of health promotion, sales and product development, University of Pittsburgh Medical Center Health Plan. “Paint a stairwell to promote taking the stairs as opposed to the elevator, have weekly walks for employees.”
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.
“Saving money is all about member engagement,” Shugars says. “Make sure your employees are educated on how to use their health insurance coverage properly and they know what the right physician to see for a specific ailment is. Promote wellness and measure your efforts to document what works best for you and your employees.”