Firms Digging Deeper to Control Health Costs
Companies hoping to keep health costs down next year need to start planning now.
By Martha Lynn Craver, Associate Editor, The Kiplinger Letter
February 24, 2009
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Across the U.S., employers are looking at next year’s health plans, seeking new strategies to hold down costs. Early spring is when employers typically start to map out their health plan approaches for the coming year. These efforts are taking on even more urgency this year because of the economic downturn and the fact that 2009 plan offerings were already in place when the economy went off the tracks.
Vendor relationships will be fair game. Employers should review current contracts and shop for better deals. Insurance carriers, which have seen a big drop in membership as a result of downsizing, are eager to build back their numbers. “This gives employers huge negotiating leverage,” says Dean Hatfield of Sibson Consulting. It also provides employers with an opportunity to negotiate for extra services as well as cost savings and to lock in multiyear rate guarantees.
Employers should also review pharmacy benefit manager (PBM) contracts that are more than a year old. When PBM rebate deals with drug manufacturers change, employers must revise their contracts to get the benefit. Other contracts that have less of an impact on workers, such as life insurance, are worth a look, too.
More cost shifting to employees is a given. Employers have tried to ease up on shifting costs to workers, concerned that it would cause workers to forgo necessary medical treatments. “But now, with the economy in such a state, everything is on the table,” says Jim Winkler, a consultant with Hewitt Associates. Deductibles and premiums will be increased. In addition, surcharges will go up for spouses who are eligible for coverage elsewhere as well as for smokers.
Employers will conduct dependent eligibility audits, scrubbing their lists to make sure that people who are covered by the plans actually are eligible. This is especially important given that with other companies laying off workers, more people may try to become covered under a spouse’s or a partner’s plan.
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Reader Comments (2)
Posted by: Jerry Uppling, Ph.D. at 02/24/2009 04:49:10 PM
After forty years in the Health Insurance business I have watched Employee Health Plans go from a "benefit" to an "entitlement" it is no wonder costs are out of control. Health conscious employees are more effective employees. What employers should be asking themselves is, "what can I do to encourage employees to be health conscious?" Healthy employees will lower rates better than plan manipulation.
Posted by: Katherine, mid-mgr. at 03/01/2009 03:11:38 PM
I agree that healthy employees reduce health care costs, but this can be (and is being) taken too far lately. At my place of employment (government agency), we've become almost a doctor's office in terms of the barrage of health care information (all readily available on the internet, etc.) that's being shoved down our throats on a near-constant basis. Also, nearly every type of health care screening imaginable is showing up at our worksites in mobile vans. Enough already! This is an office environment, not a hospital or clinic. Employees (as well as other citizens) should be responsible for properly scheduling their sick leave to take care of their health screenings and other care. As a tax payer, I shouldn't have to foot the bill three times --first for the employer's portion of the health insurance, second to pay for employee sick leave benefits, and third for employees to go get mammograms or prostate exams on work time (not to mention the fact I DO NOT want to know when my co-workers are getting poked and prodded, all so that we supposedly can save a few bucks.) Saving money is important, but so is common sense, propriety, and making individuals responsible for taking care of their own health needs on their own time.