Vol 1 Issue 6

It is that time of year again when most employers are anticipating their new health care premiums for the upcoming year. Employers are in a quandary trying to maintain quality health care for their employees at the same time trying not to eat into the operating budget any more than it already has. Did you know that our current health care system two out of three Americans get their coverage from their employer? The system looks to employers to provide this important benefit to our citizens – what is an employer to do?

More than ever, employers need to be hands on in designing their health plans and obtaining basic information how the health care system works in this country. The way medical care is paid has a huge impact on rising cost and keeps individuals from controlling their own health care. Did you know out of every dollar that the United States spends on health care, only 12 cents comes out of the pocket of patients, according to the Centers for Medicare and Medicaid Services. Most of us have our medical expenses covered by a third party, either an insurance company or the government.

When we pay for health care with someone else's money, it creates nasty incentives. It's good to be covered in case of a medical catastrophe, like a heart attack or cancer, but when patients pay for almost everything from physicals to acupuncture using third-party money, they have no reason to care about cost.

Because of the third-party payer system, employers continue to see their insurance premiums rise through the roof. So what can employers to do change this escalating cost? Consider a health insurance plan with a high deductible (consumer directed health plan). To help meet that deductible, the employer puts money into a "personal wellness account" for each employee and employees use that money to pay for routine care. The money in the account belongs to the employees and puts them more in control of their health-care spending. Employees pay for the small stuff, like sore throats and sprained ankles, but their health insurance covers them in case of a catastrophe. Accounts like these are typically called HSAs, or Health Savings Accounts.

One employer who has taken the lead of utilizing HSA’s and high deductible plans is Whole Foods and the saw their health-care costs drop by 13 percent the first year the plan was in place. Initially, some employees objected. They wanted the old "full-coverage" plan back. Whole Foods educated their employees on the pros, cons, and cost of the traditional health care plan compared to a high deductible health care plan combined with HSA’s. They then held a vote and 77 percent of their employees voted for the high deductible health plan combined with a HSA. Today most employees love the plan because it allows them to spend the money how they want to spend it.

Today, only 4.5 million people in America have Health Savings Accounts, according to a 2007 census conducted by America's Health Insurance Plans. That's a tiny fraction of the insurance market, but consumer-directed health plans are a step in the right direction toward placing individuals — not government or insurance companies — in charge of their health-care dollars. The more people control the money they spend on their own health care, the more people shop around and the more providers compete to attract patients by lowering prices while improving quality. It's putting individuals in control that could turn our health-care sector into the vibrant, competitive marketplace that is in nearly every other area of our economy.

Take the first step in containing your health care costs and putting your employees in greater control of their health care plan. Contact your health care insurance agent – ask about details of providing a high deductible health care plan combined with a HSA. With proper plan design and lots of communication to your employees you could cut your health care insurance premiums and not compromise the quality of health care provided to your employees.

Most employers that offer a consumer-directed health plan (CDHP) say communicating with workers about these plans is their greatest challenge.

Employers should begin communicating information about the new plan to workers four months prior to open enrollment. The consumer-driven part of consumer-driven health plans means that workers need to be engaged, and that can’t happen without effective communication. These plans are different from those that most employees previously had, and it’s not a simple task to encourage employees to carefully review their options and learn how consumer-directed plans work.

Employers concur that getting employees to enroll in these plans can be difficult when they also have more traditional health plan options. The study found that employers were most likely to achieve high levels of CDHP enrollment when they devoted additional time and resources to communication, forced employees to make an active choice at open enrollment and offered financial incentives in ways that enhanced the appeal of the CDHP.

Employers have high expectations for CDHPs in containing their health care cost without compromising health care for their employees. While their early experiences are favorable, the success of the plans will ultimately hinge on whether employers can provide employees with decision support tools that will empower them as engaged consumers.

A group of labor, civil liberties and immigrant rights organizations has filed a federal lawsuit to stop the Department of Homeland Security from implementing its new "no-match" regulations that were to take effect September 2007. The effect of this lawsuit has put a temporary halt on the implementation of the new legislation.

Until this lawsuit is resolved, employers should follow general guidelines after receiving a "no-match" letter which include:

Volume 1, Issue 6 (October, 2007)