Reducing health plan costs

According to Dean Hatfield and J. Richard Johnson of the Segal Company, although employers in downsizing mode may experience some short-term costs savings due to the reduction in staff, health plan costs will still rise for several reasons:
• An increase in coverage for your employee’s spouses and dependants due to lost health plan coverage;
• Employees will have to work longer to re-establish lost savings;
• An increase in stress-related disorders (due to fear of job loss, savings losses, spousal unemployment etc.);
• An increase in claims on minor health procedures as employees become proactive about getting work done (dental, minor surgeries etc.) in case their benefits run out.

Before increasing premiums or scaling-back or eliminating health plans, plan administrators are advised to try these key cost-saving strategies:

1) Maximize your health care vendor relationships
Review your contracts—even if you aren’t at the end of your contract, changes are often made possible so that vendors remain competitive in tough economic times. Plans may also want to consider linking performance guarantees to cost savings. Meet with your vendor and ask them how they can help you to meet your budget while accomplishing your strategic goals. Request guarantees on important service areas so that your budget estimates are accurate. Everything should be negotiable.

2) Promote preventative care
Enhance your existing wellness program to improve healthy outcomes and keep costs down. Don’t buy off the shelf—target the areas where you know you can get better results. Improve your health management and coaching services and encourage patients to stay on their meds and therapies. Target specific diseases and procedures based on your plan population.

The caveat? Don’t get saddled with a costly or complicated program that you may want to get rid of when the economy improves.

3) Reduce waste
Plans may be surprised at the cost savings from reducing redundant paperwork. Consider eliminating costly printed materials in favour of online versions.

4) Barter access to your membership in exchange for free services
Consider trading a booth at a company health fare in exchange for including mention of a vendor wellness program in your printed or online materials. Pilot new programs by leveraging participation with your vendors (e.g. free customized communications with the start of a new program.)

5) If you have no choice but to scale-back on benefits, consider adding voluntary employee-paid benefits as a low-cost option
Voluntary benefits may reduce the fallout from eliminating programs and is a good way to fill in the gaps. For instance, if you lower your life insurance plan, employees can then opt to pay for life insurance as needed. Not only that, but down the road when the economy turns around, you can keep the voluntary plan as part of your long-term offerings.

When plan changes are necessary, it’s extremely important to communicate the changes to your employees, especially when dealing with an edgy workforce. As well, be aware that many employees can’t afford large premiums or voluntary benefits, especially if you’ve stopped giving pay increases.

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