The Health Care Conundrum — Part I

By Matt Haverdink

The ever daunting task of helping employers find ways to control healthcare costs and keep benefits strong and affordable is not an easy one. Fortunately, the small employer can do something other than the “do nothing” strategy.

We, as a community or employer group, pay for our claims one way or another. I’m here to tell you the doctors, hospitals, pharmacies and insurance companies are NOT losing money. We’ve all seen the tremendous expansion in Grand Rapids and the surrounding areas. Who is paying for that? The cost is being passed on to employers and employees.

I have yet to find someone to disagree with the theory of - healthy employees cost less than those who are sickly. Sure some illnesses can’t be avoided, but the Center for Disease Control states 70% of our healthcare costs are controllable. By that I mean, nutrition, exercise, weight control, smoking etc. The obesity rate in Michigan (27.7% in ’07) is increasing at a very rapid rate. Long ago are the days when kids spent the entire day playing ball and being outside. It is a different society with the computer and video game options available.

My experience with several of my clients as well as our own experience is worth mentioning. For our agency we have been able to keep our health care cost increases to a minimum. In fact our rates for a no deductible plan are slightly lower than what they were 4 years ago and we haven’t had to increase our employee portion of the premium or reduce benefits. Unfortunately, most employers have had to simply cost shift by raising deductibles and premiums to the employees or absorb the costs themselves-sound familiar.

When you design your plan you can afford to take more risk if you have a healthy group. Why pay for low deductibles if you are healthy? Insurance was designed to cover that which you can not afford to pay yourself. A well designed plan would take into consideration the makeup of your group, i.e. claims, utilization, age and family status.

ResLife of Grandville has experienced a huge cost savings over the past 2+ years by encouraging healthy lifestyles and designing their health plan so that their better than average claims experience rewards them and not the insurance company.

Talk to your agent to make sure that you have analyzed the different options available
(HRA, HSA, FSA). How is your premium determined (community or experience rated)? These are questions you should ask to make sure you are aggressively doing everything you can do to control healthcare costs.

________________________________________________________________________

Matt Haverdink has been providing employee benefits for 17 years and is a certified Senior Professional in Human Resources. Matt is also the co-owner of Ottawa Kent Insurance and co-founder of HealthTrack. HealthTrack is a corporate wellness provider in West Michigan of which local companies are offering their employees as a prevention tool to combat rising healthcare costs. Questions can be directed to matth@okins.com or (616) 392-6006.