Employers soon to face insurance decisions

Colorado Springs employers will face increases of 10 percent or more in health insurance premiums when the re-enrollment period starts in the fall, the chairman of Colorado's Blue Ribbon Commission for Health Care Reform 2007 said Monday.

But before employers jump to control those costs, they first should assess the importance of health insurance benefits, which often sway an employee's decision on where to work, said commission chairman William Lindsay III, an insurance broker consultant for Lockton Companies and president of its Benefit Group in Denver.

"Employers have to ask themselves what they are trying to accomplish. The philosophy of an organization should drive what's appropriate," he said during the sixth annual Benefit Update Conference by Mountain States Employers Council. The Denver-based nonprofit organization, with 2,800 member employers, has a regional office in Colorado Springs and offers services in employment law, human resources, training and services.

If, for example, an employer is in a highly competitive market fighting for good employees, reducing its health insurance costs by shifting more of the burden to employees or downgrading the plan could result in unhappy workers, Lindsay said. So would it be worthwhile to make that kind of cost-saving move?

"The answer is no," Lindsay said to the group of 75 conference attendees. "Maybe, instead, employees don't get a bonus or a raise, but their health care benefits stay the same."

On the other hand, if a company is struggling to survive, asking employees to shoulder more of the burden could be prudent, Lindsay said.

In addition to the traditional approach of having employers shift costs to employees by increasing premiums and co-payments on services, employers can turn to other methods, he said. But the strategies take time.

"The biggest mistake I see human resource professionals make is commit to the CEO or CFO that we're going to do this, and we'll see a change in one year. You need to establish a multi-year strategy, develop a baseline to measure progress, set intermittent benchmarks and track the return on your investment. It's not going to happen overnight," Lindsay said.

Other ideas:

Negotiate voluntary benefits in lieu of commission or fees. This controversial approach involves the employer asking an insurance company to remove broker commission or fees on its health plan and make up the compensation through a package of supplemental coverage, such as supplemental or whole-life insurance, long-term care, supplemental disability, and chronic disease and cancer coverage.

Steer employees to quality providers. This is another hotly debated trend in which employers provide employees with data on physicians and hospital performance from resources such as the Colorado Hospital Association, the Colorado Business Group on Health, insurer Web sites or other quality-of-care studies. The approach is becoming more popular, as studies show 30 to 50 percent of health care is wasted and patients do not get correct treatment half of the time, Lindsay said.

Conduct dependent audits. Lindsay recommends hiring an outside auditor to determine whether employees' dependents are eligible for coverage. According to some estimates, the typical plan has 20 to 40 percent ineligible dependents on its rolls, including divorced or legally separated spouses and grown children who no qualify by law.

Analyze whether disease management programs will save money. Lindsay says disease management can escalate costs for the employer because it addresses specific diseases, such as diabetes and heart disease. If that's not where the bulk of the employer's claims are being spent, it's not cost effective, he said.

Take control of wellness programs. Many employees lie or guess when filling out health assessments, so employers also should use clinical tests, Lindsay said. Wellness programs must be integrated into health plans, focus on lifestyle modification and seek moderate change over time, he said.

Manage pharmacy benefits. The employer can ask the pharmacy benefits manager to return pharmacy rebates, which normally represent a savings of 8 to 10 percent of the drug cost. Also, the employer should review pharmacy dispensing fees, the generic substitution rate, and the list of preferred drugs to determine cost effectiveness. The employer may add separate charges for expensive injected drugs for cancer or transplant patients, or require employees to exhaust use of inexpensive drugs before turning to more expensive ones - depending on the company's philosophy on health benefits.

-

CONTACT THE WRITER: 636-0235 or debbie.kelley@gazette.com