Businesses change plans, pare benefits

Like the common cold, no business type or size is immune from the
challenges that soaring health-insurance premiums pose.
Employers have responded to the dramatic increases in
health-insurance costs of recent years by shopping and shuffling.
They search for new plans, opt for fewer benefits, reduce the
coverage they provide or simply forego health insurance in an effort
to cure ailing pocketbooks.
The Employer Source, which contracts human resources, health-plan
administration and employee-assistance programs for employers, took
the now-typical approach when faced with its own increasing premium
costs, said Mark Weaver, chief operator officer.
“We shopped like everybody else does,” he said.
The Employer Source covers the full cost of health-insurance premiums
for its own employees. Employees can opt for coverage of their
dependents but must pay the premiums. The business changed plans last
year in search of a more-affordable plan with better benefits.
Weaver said the No. 1 thing he has seen businesses do is change their
health-plan provisions: increasing deductibles and insurance co-pays
and making employees share some of the burden of the plan design
changes.
“In some cases, companies are backing away from how much they pay for
health insurance,” he said. For example, where an employer once
covered 100 percent of the premium cost, in the face of rising
premiums the employer has dropped that to 75 percent.
Weaver said it doesn’t matter what type or size of business: All are
affected. Insurance broker Lowell Volk of Integrated Benefits echoed
that assessment.
“Nobody is immune to it, whether they’re a one-life shop or a
500-life shop. Small groups under 50 have historically been hit a
little bit harder because of specific state legislation addressing
that segment,” Volk said.

Some relief lately
Meanwhile, the trend in double-digit premium increases has slowed in
recent months, insurance experts say. After two to three years of
increases that sometimes reached as high as 50 percent, the trend has
softened.
Renewal rates are currently increasing fairly consistently by
percentages in the mid-teens, Volk said. While that will provide some
relief, it hasn’t stopped employers from scrutinizing their coverage.
“Generally, if it’s a lower, milder renewal increase, then
(businesses) are usually sticking with the same carrier but making
some minor benefit adjustments to offset the increase,” Volk said.
Volk said employers are starting to look at some new options for
providing health-care coverage to employees.
“We’ve still got a lot of employers moving some things around,
shuffling some of the costs back to employees through premiums and
benefit design changes. We have been able to get a lot of employers
to look at altering funding ideas to cost-share with employees.”
Volk said some employers are turning to programs such as medical
reimbursement accounts that feature high-deductible health-insurance
programs. Employees and employers contribute to a medical
reimbursement account that can provide financial help to employees
who face major medical expenses.
Association and cooperative plans that allow industry and other
groups to negotiate and purchase health insurance also have received
increased attention.
“In all honesty, a lot of people think that’s the save-all to
bringing these costs back down,” Volk said. “I think they’re going to
be disappointed when they really see what’s there.”

Too many mandates
While the potential discounts available for volume purchases will
help, Volk said the discount isn’t as substantial as many people
anticipate it to be. There are too many state mandates in the way of
these plans affecting their affordability, he said.
Weaver said The Employer Source put a mini-medical plan or
limited-benefit health plan in place for its clients. This provides
options to the employees of businesses that don’t have major medical
plans. It also is available to the part-time employees of Employer
Source clients. Part-time workers often are not eligible to
participate in employer health plans.
The mini-medical plan offers co-pays and some well-office-visit
coverage, Weaver said. The group plan is considerably less expensive
but does not provide catastrophic coverage.
“The idea is to be sure people get in to see their physicians for
minor things like strep throat before they become major things like
scarlet fever and they end up in the emergency room,” he said.
A positive element of some of the changes that have gone on as
employers attempt to cope with rising premium costs is that employees
find they must take more responsibility for their health-care costs.
“If employees have to share some of the load, they’re probably more
aware of costs and more likely to be picky as consumers,” Weaver
noted.
In the near future, Volk looks for new health-insurance savings
accounts to offer some relief to employers, as well as a common-sense
approach to helping employees.
These new plans, modeled after the now-discontinued medical savings
accounts, allow employers to purchase high-deductible health plans to
insure members for catastrophic events. In addition, employers and
employees contribute to medical savings accounts that are used to pay
out-of-pocket health-care expenses such as deductibles, co-pays and
prescriptions.
“It’s really an MSA (but) liberalized a bit. Now the group market is
going to start to make it available. That’s going to be a godsend in
my mind once people become accustomed to it,” Volk said.
He estimated that the new HSAs might begin to be available in the
third or fourth quarter of this year.

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