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Fresh Ideas to Lower Health Insurance Costs in Virginia
by Gregg Kennerly | Published Monday, June 28, 2010
As the second largest personnel expense for a company behind salaries, healthcare costs continue to increase faster as a percentage of business revenue than any other single factor. The effort to curb healthcare cost increases has become one of the most important and contentious issues of our time.
The initiatives offered by congress and private industry are many and varied. The complex healthcare cost issue has tentacles that touch almost every sector of the economy, with downstream consequences that are impossible to predict. However, there are a number of strategies that businesses can implement to lower overall costs, help improve employee health, and create better financial outcomes for their health insurance plans. Doing nothing will certainly not improve the situation or give you an edge over your competitors. So what can be done?
Management should lead the way to better health. Corporate leaders should set the tone for encouraging better health among employees. Make sure healthy foods are served in the company cafeteria and that vending machines on company property contain healthy choices for snacks and drinks. A company vending machine full of soda and candy isn´t sending a message that management cares about the cost associated with paying for unhealthy lifestyles.
Focus on the 20% of your employees incurring 80% of the costs. Top insurers all feature disease management programs that strive to save dollars by proactively managing high-cost chronic conditions such as diabetes, heart disease or asthma. These programs are reported to save between 1.5 and 3 to 1 on costs. If your company utilizes a fully insured plan, the insurance company will have a process to identify individuals with manageable conditions. The key to increasing the savings and thus improving your bottom line is to get early program enrollment by those employees that otherwise really don´t care about their health or seek out assistance with health problems. If your carrier doesn´t have a robust disease management program, strongly consider switching to one that does.
Employee Health Risk Assessments, otherwise known as Health Risk Reduction Programs (HRRPs), can be used by plan sponsors to identify emerging problems with employee health and lifestyles. Using these tools is generally held to be legal for employers to use with current employees. To maximize effectiveness, the results must be paired with significant incentives for employees to take the recommended action to improve their health. Also, HRRPs can be an important identifying tool for disease management programs. Many companies offer these assessment services, and several should be consulted before hire, as methods and metrics of reporting are quite variable.
Plan Design Considerations are fundamentally important. Studies have consistently shown that the most cost effective treatment models encourage access through primary care physicians. Family doctors can effectively treat about 90% of chief complaints in the office. Institute or continue a plan design with a higher co-pay level for specialists. This has proven to have a significant effect on costs, as it reduces employee self-diagnosis and lessens the use of tests that are unnecessary for basic diagnosis purposes. Pairing an HRA or HSA with a high deductible plan including wellness incentives is a smart way to incent employees to be healthier in their lifestyles and healthcare choices
Contact Advanced Benefit Strategies of Virginia at (757) 536-4554 for more information.