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HEALTH BENEFITS
FIGHTING RISING COSTS
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By Brian R.
Hook
As a professional number cruncher, Geary Hagen, vice president of
finance at Allsup Inc. in Belleville, is not alone. He, like his
financial counterparts at companies around the St. Louis region
and across the country, continues to see the cost of healthcare
climb, impacting his company’s bottom line. “The trends
that we see are the increase in the price of the premium. It’s
been double digits for the past five years,” Hagen says.
“We’re educating them on
a number of things. Use urgent care centers
and/or your doctor in lieu
of an emergency room. Use generic drugs versus
brand names drugs.”
Geary Hagen
vice president of finance,
Allsup Inc. |
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To lower costs, Allsup added a second tier to its health coverage.
Allsup, which provides Social Security disability representation
services nationwide, now offers its 350 employees a basic plan and
a premium plan. “Employees now have the opportunity to collect
based upon their needs and their tolerance to take risks,” Hagen says.
Allsup still pays approximately two thirds of the cost of healthcare,
Hagen says. But he says that over the years, Allsup has had to pass
along some of the higher costs to its employees. To further reduce
costs, Allsup is also trying to educate its employees. “We’re
educating them on a number of things. Use urgent care centers and/or
your doctor in lieu of an emergency room. Use generic drugs versus
brand names drugs,” Hagen says.
UnitedHealthcare of the Midwest, part of UnitedHealth Group Inc.,
provides health insurance coverage for Allsup. UnitedHealthcare
covers more than 900,000 individuals throughout the St. Louis region,
including central Missouri and southern Illinois. Nationwide, UnitedHealth
provides coverage for more than 55 million.
“We’re seeing a lot of interest in this. I would say that 2005 was sort of the year
of curiosity. 2006 is already looking like the
year of adoption. Employers are actually
implementing these types of programs.”
Steve Walli
president and CEO,
UnitedHealthcare of the Midwest |
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Steve Walli, president and CEO of UnitedHealthcare of the Midwest,
with offices in Maryland Heights, says his firm has been doing a
number of things to help address rising healthcare costs. “One
of the trends that you’ll see in our industry is that of transparency,”
Walli says. “We’re trying to create programs and services
that provide people with better information to make better healthcare
decisions.”
Walli says another trend is consumer directed health plans, which
include high-deductible plans like health savings accounts or health
reimbursement accounts. He says that UnitedHealth recently passed
the one-millionth mark for people across the country covered by
a consumer-directed plan. “We’re seeing a lot of interest
in this. I would say that 2005 was sort of the year of curiosity.
2006 is already looking like the year of adoption. Employers are
actually implementing these types of programs,” Walli says.
Walli says that consumer-directed plans help employees become more
engaged in the overall process, because employees are required to
pay for healthcare out of their own accounts instead of simply paying
a co-payment each time. But to do that, Walli says consumers need
the necessary tools, which include better information about pricing
and outcomes. “These products that are out there, like health
savings accounts and others, really do engage the consumer. It makes
you think about your healthcare,” Walli says.
“But as healthcare costs continue to escalate eight to 10 percent, employers are going to be looking
more carefully at these consumer-driven
healthcare plans, which are from
initial analysis, doing a better job at managing the healthcare cost ncreases.”
Tim Simpson
principal,
Mercer Health & Benefits-St. Louis |
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Tim Simpson, a principal at the St. Louis office of Mercer Health & Benefits—a consultant group that is a subsidiary of Marsh
& McLennan Companies Inc.—says he is also seeing more interest
in consumer-driven plans. But he says employers are not buying yet.
“Although almost a quarter of employers say they are looking
at consumer-driven health plans, a much smaller percentage are actually
implementing them,” he says.
“We’ve been predicting that it will change dramatically
for 2006, but we’re still not seeing a huge increase.” Simpson says the high-deductible plans, like health savings accounts,
are fairly complex to understand and require a significant effort
by the employers to communicate to their employees about how the
plans work.
“It’s our belief that many employers, particularly smaller
ones with fewer than 500 employees, have been challenged by the
complexity and therefore have been somewhat slower in adopting the
plans than one might have expected a year or two ago,” he says.
“But as healthcare costs continue to escalate at eight to 10
percent, employers are going to be looking more carefully at these
consumer-driven healthcare plans, which are from initial analysis,
doing a better job at managing the healthcare cost increases.”
Simpson says employees in consumer-driven plans tend to utilize
generic drugs more frequently, and also have fewer non-urgent emergency
room visits. But he says for these plans to work effectively, there
is a need for more data. “In most areas of the country there
is difficulties getting meaningful data, comparing the costs of
one hospital versus another, comparing outcomes, and having standardized
criteria,” Simpson says.
A recent survey by Mercer found that when annual health benefit
cost increases peaked nearly three years ago at 15 percent, employers
responded with a flurry of plan redesigns. But redesigns have slowed
with healthcare costs rising 6.1 percent in 2005, to an average
of $7,089 per employee. Mercer predicts a 6.7 percent increase for
2006.
Though the increase for St. Louis employers surveyed was lower than
the national average at 5.3 percent, Mercer reports that the average
healthcare cost per employee at $7,213, remains higher in St. Louis.
Mercer also reports that over a third of all employers say consumerism
or consumer-directed plans will be significant to their cost-management
efforts over the next five years, while 32 percent say care management
will be significant.
Simpson says it is important for employers to help employees manage
their health conditions through disease management programs and
health risk assessments. “Many employers see these strategies
as two sides of the same coin,” he says. “Care management
programs require the active involvement of employees in improving
their health, while consumerist strategies engage the employees
in managing healthcare cost.”
Bill Bennett, senior vice president at Mercy Health Plans Inc. in
Chesterfield, says he’s not convinced that the current phase
of high-deductible healthcare plans address the underlying cause
of high healthcare costs. Instead, he blames poor health behavior.
“The old 80/20 rule falls true in health-care. And that is
20 percent of your people will drive 80 percent of your costs,” Bennett says. Mercy Health, part of the Sisters of Mercy Health
System, covers about 160,000 people in the St. Louis region, including
central Missouri and the metro east area in Illinois. In all, with
coverage extending into Kansas, Oklahoma, Arkansas and Texas, it
provides coverage to 250,000 people.
Bennett says Mercy Health wants to focus on health management. “We
facilitate the effective delivery of healthcare and provide services
that empower our members to make healthy choices,” Bennett
says. “We consider ourselves a health management company with
emphasis on preventative care, wellness and disease management.”
To accomplish this, Mercy Health provides two levels of benefits,
a standard level and a level that Bennett describes as an incented
level. If people agree to do certain things to maintain a healthy
lifestyle, like enter a smoking cessasstion plan if they are a smoker,
or starting a weight reduction plan if they are overweight, employees
receive incentives.
“We found that over 75 percent of our people don’t spend
a $1,000 a year in healthcare. But that other 25 percent is where
we want to put the emphasis,” Bennett says. “We want early
identification. We work with them to maintain a personal health
record. It basically empowers the person to be accountable for their
own health benefits.”
No matter who provides the healthcare coverage, getting employees
involved seems to be the key. Back in Belleville, Kimberly Rist,
director of human resources at Allsup, says employees do not like
the higher costs. But she says they seem to be happy with the company’s
current healthcare plan. “I would say that we offer very rich
plans,” Rist says. “Anytime that you offer choices you
just have to do a lot of educating.” |
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