An Employer’s Guide to
Combating Health Care Premium Increases
by Dayna DeVito-Fleck, Lockton Insurance
Brokers
Health
care costs and, consequently, health insurance premiums are rising
at an alarming rate. Can you avoid it? Probably not, but you can
learn why it is happening and how to decrease its impact on your
organization and employees.
Industry projections estimate that
annual health plan renewal premiums in 2001 will increase 10 to
13 percent for large employers and 20 percent or more for smaller
employers. Unfortunately, increases of 10 percent or more are expected
to continue for the next several years.
What are the causes of these skyrocketing costs?
Several market conditions have lead to the current onslaught of
steep increases. The following illustrates the key factors:
- Demographics
— The Aging of America
- Dramatic
Rise of Prescription Drug Costs
- Consolidation
of Managed Care Companies
- Expansion
of Providers
- Political
Environment
- Increase
Utilization and Consumer Demand
- New
Medical Technology
- Weakening
of the Managed Care System
- Health
care Spending and Medical Cost Inflation
What Can You Do?
You and other employers are undoubtedly
trying to determine how to keep accelerating health plan premiums
from having debilitating consequences on your organization. Many
firms will try to absorb most of the costs because of employee attraction
and retention issues but will have to pass portions of the costs
on to their employees in the form of increased contributions in
some cases. In particular, small businesses will face the critical
decision to raise employee contributions or to discontinue offering
the coverage altogether. Should you pass costs on to employees at
the risk of losing some of them? Or, should you try to manage costs
in other ways?
Firms around the United States are
undertaking a variety of measures to help minimize the effect of
premium increases on their organizations. Ultimately, it is a decision
that you need to arrive at through thoughtful and detailed analysis
of your plans and with the advice from a broker-consultant. However,
there are a few general options to consider as you explore your
particular situation.
-
Consider reinventing your current "Defined
Benefit" approach to a "Defined Contribution"
approach. Many employers have redesigned their current employee
contribution strategy to a Defined Contribution Program, which
helps to educate employees as to the actual cost of healthcare
coverage, empowers employees with choices that fit their individual
needs and allows them to be better consumers of health care.
What Should I Tell My Employees?
Communicating consistently throughout
the year is one of the best ways to maintain employee satisfaction
and morale about their benefits package. If your employees understand
current trends in the health care industry, they will be more supportive
of any required changes and will appreciate the resources to provide
them with their health care benefits.
It’s a fact:
Health care costs and health plan premiums are increasing at an
alarming rate. As an employer, you want to continue to offer valuable
health benefits to your current and future employees, and you want
those benefits to help you attract and retain good employees.
Employees appreciate
hearing this, and what steps have been taken to purchase the best
and most affordable insurance plans available.
Dayna DeVito-Fleck is a Partner
with Lockton Insurance Brokers,
a national Risk Management and Employee Benefits Brokerage Firm.
She has successfully assisted her clients in cost containment strategies,
employee communication themes and program design/implementation.
Dayna can be reached at (949) 252-4414 or via email at dfleck@lockton.com.
Email
this page to a friend / Tell
us your comments
|
