NAHU, (National Association of Health Underwriters) sent a note out today regarding a Washington Post article detailing polls which show that companies are trying to reduce health care costs by a) raising deductibles, and b) increasing the employee’s share of the premium:

On the front page of its Business section, the Washington Post (1/25, F1, Haynes) reported, “A growing number of workers in 2009 will pay more for health benefits — and in some cases receive less coverage — as their employers grapple with the financial fallout of rising medical expenses and diminished revenue and profits, recent surveys of human resource officials show.” According to the Corporate Executive Board, “30 percent of the employers” surveyed “said they expected to raise deductibles an average of 14 percent in 2009,” while “Mercer, a global benefits consulting firm,” discovered that of the “nearly 2,000 large corporations” surveyed, “44 percent planned to increase employee-paid portion of premiums in 2009.” Additionally, in order to “cut costs, employers increasingly are introducing high-deductible health savings accounts (HSA) and focusing on wellness programs,” the Post noted. The article went on to discuss specific examples of employers that are increasing employee premiums or adding the option of HSAs in 2009.

As your friendly neighborhood Health Insurance Professional, I’ll offer my sage advice on this: Raise the deductible first. It makes a lot more sense to shift RISK to the employee (within reason) than it does to shift PREMIUM to the employee, and if the employees are properly educated on their options, then they will prefer to MAYBE spend an extra few hundred or couple of thousand dollars a year, then to DEFINITELY have that much or more additionally taken out of their paycheck.

The Post article, as is common with press regarding the Private Health Care System in the U.S., displays an utterly unrealistic view of that system (I know…really shocking). This, for instance:

Carter, a technical editor for a District consulting firm and mother of twin boys and a girl, is facing steep increases in out-of-pocket expenses for health coverage this year. What she shells out for premiums and co-pays more than offsets any fuel savings. Her employer picks up 50 percent of the coverage for her family, up from 33 percent a few years ago. But because insurance costs have soared, she says she’s actually paying $200 a month more in premiums.

Her co-pays also have risen to $30 from $20. That extra $10 adds up, Carter of Bowie says, with “accident prone” teenagers in and out of the emergency room: Her 19-year-old track star son suffered a lacerated liver, broken rib and concussion when he slipped and fell on wet pavement. Her 16-year-old cheerleader daughter who is asthmatic is in physical therapy three days a week for a dislocated knee. Carter and her other son contribute to the costs with visits to the doctor for serious flare-ups of asthma.

So the companies are paying a higher percentage of the premiums than they were (very rare) but its a “sucker-punch” to expect policy-holders to pay an extra $10/doctor visit.  The truth is, the company is likely not raising copays ENOUGH, which is one of the reasons why costs keep going up.  If Ms. Carter actually had an in-network DEDUCTIBLE (which from this it doesn’t look like she does) the company AND her would fork out a LOT less money monthly for her coverage.

Here Locally in Loudoun County, the School Board has the option (and it looks like it’ll happen) to increase copays on prescriptions from a 5/20/40 to a 5/25/45 tiered system.  How much is that going to save Loudoun Taxpayers (to say nothing about how much it’ll save out of School employees’ checks every month)?  Over $1,000,000.

An extra $5 per prescription MAYBE saves roughly $10/employee/month DEFINITELY.

If your employees (or your employer) are NOT educated on these phenomena, then feel free to shoot me a note at wdporter@gcfin.com, and I’ll be happy to help.

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Butch Porter
Goose Creek Financial
Loudoun Health Insurance Professional