BENEFITS by Dave Szymanski | Tampa Bay Editor
Getting better control of the health insurance process for your employees and lowering costs takes planning, communication and a holistic approach.
Fall approaches. This can mean a number of good things for a Gulf Coast CEO: Fourth-quarter profits, holiday revenues, cooler weather and football.
It can also mean the dreaded time is once again upon us: Open enrollment. Can we go back to football?
Open enrollment is the annual paper chase, numbers-crunching, jargon-decoding, acronym-filled tiring exercise of renewing your company's health care plan. And that always means higher costs. And talking with providers. And explaining changes to employees. And meetings. And phone calls from insurers. And more meetings.
But it doesn't have to be this way, if companies can be a little more strategic, communicate clearly and consider new approaches, benefits brokers say.
Both companies and employees may even be able to save money in the long run.
Health care has long been a cost of doing business, but it's been a fast-escalating cost in the past decade. Meanwhile, the available workforce has been shrinking, making it harder to keep and find good employees.
Sixty-eight percent of Florida companies increased health insurance premiums this year, according to Comdata Surveys. The average increase was 10%. In 2006, 73.3% of companies boosted premiums.
"Health care plans haven't been provided to cure people," says Jim Rogan, vice president and manager of the corporate benefits division of M.E. Wilson Co. in Tampa. "They've been provided to retain and attract new employees. As the unemployment rate stays low, it's important to compete."
But Rogan agrees that to control costs and attract good talent, companies need to consider new approaches. Another Gulf Coast executive preaching the new benefits gospel is Rob Pariseau, CEO of Benefits Solutions Group, a startup Tampa-based benefits brokerage and a veteran of corporate benefits work.
Before starting Benefits Solutions, Pariseau worked for big companies such as Wachovia, Ceridian, Mass Mutual and Cigna for 25 years. He has seen the old rates-based approach and the results it has achieved today.
"In what we do, we can take your business in any direction you want," Rogan says. "We can work as an independent source, or find you a wellness provider."
Rogan, Pariseau and others help companies break out of the pattern of finding the best rate, holding a meeting or two with employees and essentially forgetting about the process for a year.
To help employees take better care of their health and finances, Pariseau helps companies hire third-party experts to come to the company and talk to employees about lifestyle changes. There are experts available by telephone and online as well.
"We call it a personal plan for health," he says. "What do I need to do to stay healthier longer? If there's no change in behavior, I'll get diabetes. Chronic problems will become acute, if nothing is done. Health care costs go through the roof."
This is key to controlling costs down the line. He tells the story of the community that lived on the edge of a cliff. Residents kept falling off. So they established a world-class ambulance company at the bottom of the mountain, which could respond in seconds. Wouldn't it have been smarter to build a fence around the edge of the cliff? The fence would be the personal plan for health.
"It all depends on your health," he says. "If you're not healthy, you're handing your 401(k) to the health care system."
Pariseau suggests a similar approach to helping employees with personal finance health to address cash flow, protection from illness, savings and tax and estate planning.
"Where are you now, what are your rights and let's help you stay on that plan," Pariseau says. "This leaves them much better people. It's in the employer's best interest to facilitate this stuff. If people are financially stressed, they can't appreciate the benefits."
These are examples of one of the biggest trends in health insurance: "consumerism." That is, putting more responsibility in the hands of employees. The health savings accounts, which allow employees to save money for medical costs, are an example of that.
United Healthcare, to prepare for and take advantage of, HSA business, bought a bank to handle deposits. Other banks are buying other banks who specialize in HSAs.
The biggest obstacle to using HSAs: Getting employees to understand them. That's where better communication comes in. All year.
"There's no reason to panic at renewal if you're communicating with your broker," Rogan says. "You should have the same level of expectations."
Pariseau agrees: "If you have a very rich benefits package and you don't communicate it, it's not appreciated as much as a lean plan that's well communicated."
But further complicating this is a challenge for insurance agents: putting in more time explaining the new plans and making less money on them. "A lot of agents aren't willing to do it," Rogan says.
Pariseau agrees, although he plans to actually serve less clients than he did at the big corporations, but serve that smaller pool of employees better so they succeed more.
He compared it to the movie Jerry McGuire where sports agent Tom Cruise became more successful by helping a smaller number of clients, such as football player Cuba Gooding, become more successful.
"I don't think employers are getting all they need from benefits brokerages," he says. "They get: 'We'll check back with you. We'll shop it. We'll change carriers. We'll shift more costs to employees. We'll deal with it 12 months from now.'"
If you're a business with less than 50 employees in the Tampa Bay area, a sizable chunk of the market, the market has now shrunk to six carriers, so there's fewer choices. Ten years ago, there were about 200 companies offering health insurance. As costs rise, some brokers are expecting the federal government to step in.
"I expect federal regulation of insurance in 10 years or less," says Fred Stack, CEO of Armistead Insurance Services in Tampa. "Medicare is like a full-blown insurance company."
Some reasons for increasing health care costs are technology, the aging of the population and longer lifetimes.
The U.S. population is aging and people are living longer. In general, this means they are needing more health care. Baby Boomers are hitting their 60s and getting diagnosed with high-blood pressure, high cholesterol and other conditions.
As a result, about 20% of Americans are paying about 80% of the health care claims. Life insurance rates have fallen because people are living longer, but that hasn't balanced out the spike in health care costs.
"It's not fair that someone who is healthy takes on that burden," Rogan says. "Most people don't use more than a few thousand dollars in health care a year."
Meanwhile, technology is improving to meet those needs, extending lifetimes and improving the quality of life, but it costs more in many cases.
Both trends boost costs, which get passed to insurance companies, which get passed to employers, then employees. Employees get squeezed on premiums and possibly on deductions and co-pay amounts as well.
The parents of these employees may have paid $30 a month for premiums, $150 for deductibles. They may also have had a defined pension plan, that the company fully paid for. Now, employees pour their own money into stock-based 401(k) plans. And some of those employees, while paying into 401(k)s, are smoking, overeating and getting less healthy.
"The quality of retirement will depend on your health," Pariseau says.
"Employees are frustrated," he adds. "It's a bad situation getting worse. Employers are spending more and more for something that employees are appreciating less and less."
The benefit to improving the health insurance plan process isn't just attracting and retaining good employees. It's actually getting employees to perform better.
from the pros:
• Teach employees how to practice preventative health. Healthier employees are working hard for you, not calling the doctor to solve complications from obesity or other problems. Often they need to change their lifestyles.
• Teach employees how to manage their personal finances. Fiscally fit employees are focused on making you profits, not worried about calls from debt collectors.
• Communicate the benefits plan clearly and often. The better employees know what they have, the more effectively they will use it and the happier they will be. They will also tell others about it, helping you attract good talent.
• Communicate with companies all year long so they know what to expect and how to plan. More time to plan gives you more options.
• Consider new approaches, such as health savings accounts, or HSAs. If you're skeptical, consider this: What do Blue Cross/Blue Sheild and other health insurance companies offer their employees? Not HMOs or PPOs, but health savings accounts. Why? Because they save money.
• Encourage employees to ask for generic drugs, which can sometimes be just as effective as name-brand pharmaceuticals. "The pharmacy is the No. 1 place to make the biggest change," Rogan says.
• Don't deal with insurance brokers from out of state. They don't know the nuances of the local health insurance market in detail. This is still a fragmented business. No brokerage controls more than 5% of the market share.
Industry: Health insurance
Key: Communicate clearly with employees and providers all year, consider new approaches and help employees be physically and financially fit