The well-rehearsed steps of the health plan enrollment dance performed by employers and employees are starting to see a new twist, with some companies seeing lower medical claims through encouraging employees to take better care of themselves.
Rising health care expenses have left employers reducing benefits and shifting costs to workers in order to continue providing coverage, and it also got companies like Public Service Enterprise Group thinking about ways to cut costs by having healthier employees. PSEG started offering employee wellness programs in 2004, but didn't see much impact until 2007, when it began offering financial incentives to improve participation, said John Tiberi, vice president for employee benefits, health and safety.
PSEG employees on average pay 20 percent of their health plan costs, but they get discounts of between 25 percent and 30 percent off their contributions by taking part in a cardiac screening, completing an online health risk assessment, and taking a "tobacco-free pledge" or joining a smoking cessation program. PSEG has fitness centers at two of its facilities, subsidizes gym memberships, and offers weight and stress management programs.
Tiberi said while health costs are not declining, "we are actually seeing a reduction in our trend rate." Where in past years costs rose 9 percent annually, "this year, we are seeing a pretty significant reduction" in the rate of growth in the company's health care bills, though he said the exact percentage is still being tabulated.
"I have come to the conclusion that we are finally starting to see some payoff from these programs," Tiberi said.
But PSEG's story is far from typical.
"Some employers are reaching the breaking point, and are making the very hard decision about whether they can continue to offer benefits," said Christine Stearns, vice president of the New Jersey Business & Industry Association.
With the economy recovering slowly, health insurance premiums are rising faster than revenues for many companies. She said she advises employers that want to keep offering coverage to "work closely with a broker to find the right plan — they need to focus, start early and spend a few months exploring their options."
High-tech industrial component maker Falstrom Co., in Passaic, buys coverage in the state-regulated small-group health insurance market, which is limited to employers of fewer than 50. The company offers a choice of two health plans, with deductibles ranging from $1,000 for a single employee in an HMO, to $5,000 for family coverage in the non-HMO plan; employees pay 25 percent to 27 percent of their premiums. This year, the company raised co-pays and deductibles to keep premium increases between 2 percent and 5 percent, instead of as high as 18 percent.
"Health insurance is a huge cost for both the employee and the company," said Cliff Lindholm III, president. Falstrom provides coverage "because we want to make sure if our employees get sick, they have access to health care for themselves and their families. And to be competitive, we absolutely have to offer health insurance to attract and retain employees."
He said the average worker tenure is 15 years, with some employees on the payroll for more than 30 years, "and you don't keep employees for that period of time if you don't provide a good work environment and competitive benefits."
While a big, self-insured company like PSEG gets a direct financial payoff if workers are healthier, in the small-group market where Falstrom buys coverage, the claims of thousands of employees are pooled together. A single small company can't push down its own health care premiums if its employees' health improves.
Peter Morey is director of product development at Horizon Blue Cross Blue Shield of New Jersey, which has the largest market share in the small employer group market. He said in 2013, Horizon will launch a new online wellness program for the small-group market, which "is about getting people engaged and being more active and doing things that make sense." For example, one tool will allow workers to earn points for hitting various wellness targets, like the number of steps walked.
Morey said while it's true that pooling in the small-group market prevents companies from controlling their own premiums, "this is really about creating an overall culture of wellness across our entire book of business, and that can only have a positive impact going forward." He said large self-insured groups are seeing results from wellness, "and our challenge is to take this out to the small group."
Michael J. Mascolo, the Northeast regional practice leader of employee benefits for Wells Fargo Insurance Services, said more than half his clients provide some health and wellness programs, including some programs that target the 20 percent of the insured population — typically, those with chronic conditions — that accounts for about 80 percent of health care spending.
Mascolo, who's based in Madison, said while many employers are offering high-deductible plans in order to keep premiums down, the Affordable Care Act requires certain preventive services, like annual physicals, cannot be subject to the deductible, and are provided without out-of-pocket expenses or co-pays. The goal is to encourage preventive care, and identify illness earlier, thus improving health outcomes while lowering costs. He said his role "is to communicate to employees the decisions they can make to optimize their benefits. With slight changes in behavior, people can improve their health and lower their costs."
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