Healthcare costs are expected to increase nearly 10% in 2009 for employers, a drop from previous annual increases but enough to make companies consider new benefits strategies, according to PricewaterhouseCoopers (PwC) Health Research Institute. Only 38% of employers surveyed by PwC's "Behind the Numbers: Medical Cost Trends for 2009" study say they expect to increase cost-sharing through plan design changes. Instead they'll depend more on wellness programs and health plans that personalize member experiences, including consumer-driven tools.
According to Curtis Smith, executive vice president of employee health program provider Medcor Inc., manufacturers are addressing rising healthcare costs by:
- Becoming self insured or buying a large-deductible plan, resulting in more risk but increased control over costs.
- Raising copays and deductibles for employees.
- Offering flexible spending accounts, which provide significant tax savings for out-of-pocket health expenses.
- Providing health benefits that target cost drivers, such as chronic disease management.
- Providing strong financial incentives to use generic and mail-order pharmaceuticals.
- Promoting wellness and healthy lifestyles.
- Establishing a preferred provider network.
One of the services Medcor offers that's being utilized by Encore Wire Corp., a $1.2 billion copper wire producer, is an in-house medical clinic where employees can seek medical attention for minor injuries or illnesses from a physician assistant. The program originally was implemented in 2001 with a paramedic who only served employees. Five years later, the company added a physician assistant who also is available to employees' spouses and children.
The program has helped Encore Wire reduce its workers' compensation costs approximately 200% by treating employees in-house instead of filing a claim for outside service, and the company's group health insurance costs have dropped since workers and their families can seek treatment onsite rather than at an emergency room, says Duane Metcalf, Encore Wire's medical coordinator.
Employees pay a small fee for their initial visit and each additional visit over the next 30 days is free for the workers and their families, Metcalf says. In addition to lowering healthcare costs, the clinic has improved productivity, Metcalf says. "If an employee is feeling ill at work, they can be seen quickly by our PA (physician assistant), then return to work, if the PA
allows," Metcalf explains.
At the beginning of 2008, electrical and electronic products manufacturer Leviton Manufacturing Co. Inc. switched to an online health benefits enrollment system that the company says has saved money through reduced paperwork and streamlined processes. The company, which employs 4,000 people in the United States and 10,000 globally, launched Benefitfocus' eEnrollment system in January 2008. The Web-enabled process allows the human resources department to focus on more value-added activities, says Fran Ruderman, senior director of benefits and compensation for Leviton.
"We did not have to eliminate any personnel," she notes. "Instead, we were able to become more effective in our human resources roles and streamline our processes. Previously when employees filled out the forms using paper, we'd have a team of folks who would have to key in the information and fax the forms across to the various vendors. Sometimes the information was incomplete, and the HR folks would have to track down the employee to get complete information before the forms could be processed, or the handwriting was difficult to read and information would be unintentionally keyed incorrectly."
The system also has allowed the company to spend more time focusing on wellness programs for employees, says Ruderman. The corporatewide wellness initiatives have kept year-over-year benefit cost increases to around 6%, significantly lower than the double-digit increases other industries have experienced in recent years, notes Ruderman.