Prescription for Relief

By Hannah Wallace October 31, 2006

Is there a doctor in the house?

That's what many companies are tempted to shout when dealing with the rising costs of healthcare. It's a huge issue, both in Sarasota-Manatee and across the country, and it's one that's especially a burden for small businesses, which make up a big part of this region's economy.

According to the National Federation of Independent Business (NFIB), which represents about 600,000 small business members, 46 million Americans have no health insurance, and 27 million of those Americans are small business owners, their employees, and their dependents. Healthcare has been the No. 1 concern for NFIB members for at least 20 years, and it's become the association's No. 1 priority.

Amanda Austin, NFIB's manager of legislative affairs, says that small businesses have seen larger premium increases than big companies and individual customers over the last five years. And because small businesses have a tighter profit margin than large companies, the high cost of insurance often prevents them from offering any kind of healthcare coverage to their employees. Those that do offer insurance are forced to either pass increases on to their employees or absorb the rising costs elsewhere in their budgets, sometimes by eliminating pay raises and bonuses or canceling plans to hire additional employees.

But there are steps companies can take to deal with the rising costs of healthcare.

Support small business health plans

The NFIB supports this idea to allow small business owners to band together across state lines through their membership in a trade association to purchase health coverage for their families and employees. "It's a big priority for us," says Austin. "Small businesses would be able to negotiate like large businesses do on behalf of their employees." Many other organizations also support this idea, including the U.S. Chamber of Commerce and the National Association of Realtors.

Though the U.S. House of Representatives has passed legislation eight times to allow for the creation of Small Business Health Plans, it has yet to get through the U.S. Senate. Austin expects the Senate to take it up again this fall or in early spring. "It's got some legs on it," she says.

Work with a PEO

Many small and medium-sized companies use a professional employer organization (PEO) to administer their employee benefits. This often allows them to offer benefits they might not be able to on their own. Sarasota-based Charter One Hotels & Resorts, which manages hotels in New York and Florida, has approximately 1,100 employees and has found that working with Advantec, a Tampa PEO, has helped the company manage costs and increase its ability to attract and retain employees.

"We are able to leverage Advantec's large number of participating companies to offer benefits packages that are not customarily available in the hospitality industry," says Cusic Daniels, corporate director of sales and marketing for Charter One. "And they actively continue to negotiate contracts and look for enhanced benefits for us, which for a medium- or small-sized company makes it fantastic to have someone out there who is looking at reducing costs all the time."

Regularly review your current plans

If employee benefits are handled internally, companies should regularly examine their health insurance plans and make sure their current provider is offering the best deal. If not, look elsewhere. "Employers need to shop their plans frequently," says Marc Lazarus, president and CEO of R&L Healthcare Advisors, a Sarasota firm that works with hospitals, health systems and physician practices. "My own company switched plans this year because [our provider] jacked its rates."

Consult an expert

A consultant can also help businesses find health insurance options that best benefit both their bottom line and their employees. "We understand the factors that go in to building a rate," says Richard D. Klima, senior vice president at Aon Consulting in Baltimore, Md., which works with companies around the country on insurance, risk management and human capital issues. "And we're able to tear it apart, help clients understand what's happening, and have an impact in reducing costs."

Empower your employees

Employers are increasingly encouraging their employees to take a more active role in their own health and welfare. "It's stemming from the realization that the actual health status of the employees is the ultimate determinant in what the costs are," says Klima.

According to the Wellness Councils of America, more than 81 percent of American businesses with 50 or more employees currently have some form of workplace wellness programs, such as classes and workshops, discounts on gym memberships, health screenings and incentive programs.

As part of Sarasota County Government's Living Well Program, established a decade ago, employees can qualify for incentives by completing health risk assessments and attending classes and workshops on everything from using a pedometer to smoking cessation.

"We have seen a tremendous increase in participation over the years," says Angela Deem, RN, wellness development advisor for the county. "Looking at our [insurance] rates, the increases are below the national average, and we like to attribute that to the aggressiveness of our wellness program."

Charles K. Bens, Ph.D., founder and president of [email protected], a Sarasota-based firm that helps businesses around the country establish wellness programs, says companies that don't already have such programs in place "will have no choice" but to establish them as a way to deal with rising healthcare costs and employee retention. "Employers who are already doing it have a competitive advantage," he says, pointing to the fact that healthcare is one of the top concerns of American workers.

But Bens believes that for these plans to succeed, they have to go beyond the point they are at now. He says most existing wellness plans are disease-management based, meaning they help participants manage conditions they already have or are likely to suffer from down the road. To truly have a significant impact on healthcare costs, wellness programs need to help participants actually reverse medical conditions, Bens says, which can mean huge savings for both employer and employee.

For example, according to Bens, a diabetic employee costs a company four times more than a non-diabetic employee. [email protected] recently sent a proposal to a major financial institution that Bens estimates has 15,000 diabetic employees. He says if just 150 of those employees were able to reverse their diabetes, it would save the company $1.3 million in the first year alone.

Consider health savings accounts

Companies are also convincing employees to take charge of their health through the use of consumer-driven health plans, which typically combine high-deductible health plans with health savings accounts (HSAs) or health reimbursement arrangements (HRAs). They make sense for employers, as high-deductible plans tend to cost less than other options. For employees, contributions to HSAs are tax-free as long as they are used for medical expenses, and the money in the account can be rolled over from year to year.

But as Klima says, when it comes to these kinds of plans, "the jury is still out." According to the 2005 Employee Benefit Research Institute/Commonwealth Fund Consumerism in Healthcare Survey, individuals with more comprehensive health insurance were more satisfied with their health plans than individuals in high-deductible plans. The survey also found that individuals with consumer-driven health plans and high-deductible health plans were significantly more likely to avoid, skip or delay healthcare because of costs than those with more comprehensive health insurance. And despite all of the attention these types of plans get, EBRI found that as of October 2005, only 1 percent of the privately insured population ages 21 to 64 were enrolled in consumer-driven health plans.

"I think it's a great concept," says Lazarus. "The more people who get involved in their own care, the better off they are. If you're better informed, you'll use your benefits better, and then that helps everybody. But I just wonder if people will take the time to do that. It's another bank account that you've got to watch and use wisely."


Sarasota Memorial Hospital offers health insurance to small companies.

Because big names like BlueCross BlueShield and Aetna dominate the health insurance field, companies don't always have a lot of options when they want to offer insurance but can't afford the big guys' rates. It's a problem companies in this area often run into-an estimated 50,000 Sarasota County residents are currently without healthcare. That's one reason why the Sarasota Memorial Healthcare System launched the Varsity Health Charter Plan a few years ago.

The plan is open to Sarasota County companies that do not currently offer health insurance to their employees and where the average employee earns no more than 250 percent of the current federal poverty guideline.

"We [Sarasota Memorial] see such a heavy burden of uninsured and working uninsured, since we're a safety net for them," says Dr. Frank Burns, medical director of the Varsity Health Charter Plan. "We felt like if we could come up with a cost-effective plan we could help people access care earlier through their primary care physicians instead of through the emergency room. Our desire is to target small businesses that have not offered insurance before and try to help them understand that employees who have access to primary care are generally at work more and are healthier while they're there."

The plan offers routine physicals, inpatient and outpatient hospital services, and prescription drug coverage. Burns says rates are about 30 to 40 percent below most other options. "We're not trying to make money on this," he says. "We're trying to offset losses." The plan has more than 500 members, and Sarasota Memorial is hoping the number will grow. A year ago, it aligned with the Greater Sarasota Chamber of Commerce to help further promote the product to local businesses.

"If employers are able to find insurance for their employees, they have a much better chance of retaining that workforce," says Christine Manring, the chamber's vice president for membership services and development. "Plus they have a healthier workforce."

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