Marshfield-based Industrial Communications spent years coping with the rising cost of providing health insurance to its 85 employees the way most other companies do - constantly changing insurance companies, introducing a deductible and increasing copayments and employee contributions.
By 2010, company President Michael Umano had seen enough double-digit rate increases to convince him that the switch-and-cost-shift model was unsustainable. He made the bold decision to move to what was then a new class of insurance products called tiered networks, which provided employees with a financial incentive to seek treatment with doctors and hospitals providing high-quality care at reasonable prices.
Industrial Communications implemented the Options plan from Blue Cross Blue Shield of Massachusetts for its 2010-2011 premium year and limited its cost increase to 4.9 percent.
Umano described his company’s ongoing initiative to manage health insurance costs to an sold-out audience of 110 fellow employers at AIM’s inaugural Health care Cost “Employer Stories” forum in Taunton. The program offered practical advice for employers seeking to reduce health insurance costs amid the historic changes now shaking the health care market.
Umano cautioned that implementing a consumer-driven health plan was challenging.
“Change is always difficult,” he told the audience. He shared some of the hurdles his company has overcome:
- Employees prefer to pay higher deductibles than deal with the tiers.
- A high percentage of employees had primary care physicians who were affiliated only with a local hospital that happens to be in the highest-cost tier.
- Getting employees to take/accept ownership of their medical needs and make more educated decisions about what services they need and where they receive them.
- For a smaller company in a competitive business, it is difficult to allocate the time and resources required to plan and implement the ongoing employee communication and education.
Andrew Dreyfus, President and Chief Executive Officer of Blue Cross Blue Shield said products that allow employees to buy health care the way they buy other major services are the best way to address a broken health financing system.
“Here is an alternative. Rather than increasing the cost share for all of your employees, let’s engage the employees in the questions about their own health care purchases. Let’s engage them in the question of value in health care,” Dreyfus said.
“We ask ourselves for almost every purchase we make in our economy what is the value of the purchase, but we have for years not said that in health care.”
Umano offered advice to other companies on managing health insurance benefits:
- Intensive education and communication is critical when rolling out a new concept. Utilize all available assistance from the broker and carrier. Have a carrier representative speak with employees about the plan and the customer service assistance available to them.
- Understand the geographic makeup of the workforce and anticipate questions/concerns about local providers being in higher-cost tiers.
- Be prepared for the need to educate employees to help educate their providers. Many providers, and their employees, are not accustomed to having patients request, for example, that their lab work or diagnostic image be performed outside the provider’s normal referral process.
The AIM forums on health care cost control continue next week with sessions in Holyoke and Andover. Subsequent programs will be held in Waltham, Worcester and Pittsfield.
After decades of talk about the rising cost of health care, Massachusetts employers finally have the opportunity to do something about it.
That’s why Associated Industries of Massachusetts is announcing today a multi-year educational initiative to help employers control the cost and quality of the health insurance they provide to their employees.
The Health Cost Solution will offer briefings, seminars, training, Webinars, videos, online information and other resources to employers seeking to slow the soaring cost of health care that has for years depressed business growth across the commonwealth.
The initiative will draw heavily upon the knowledge AIM has developed in helping Massachusetts employers reshape the health care market in a manner that makes once unthinkable cost reduction goals achievable.
“It’s a unique moment in history. Breathtaking changes in the health-care market are allowing employers to re-think the way they purchase and manage health insurance,” said Sandra L. Reynolds, Executive Vice President of the AIM Employer’s Resource Group and director of The Health Cost Solution.
“But solving the health-cost crisis will require employers to develop a long-term plan and to mount the same sort of sustained effort they put into Kaizen or Six Sigma. Companies must become sophisticated purchasers of health insurance and employees must become informed consumers of health care.”
Reynolds says that the complex debate over health care costs has produced reams of information, but little useful knowledge for employers – until now.
The Health Cost Solution will begin in June with six complimentary executive forums featuring conversations with employers who have compelling stories to share about trying to cure the health cost crisis. Senior executives from health insurance companies and health-care providers will also share innovative strategies that employers can use to manage their health benefits. Participants will leave the sessions with concrete steps they can use right away to limit health premium increases.
Also on the agenda is a two-part summer Webinar series on cost-saving strategies for companies facing fall open enrollment period of health insurance coverage.
The most unique piece of The Health Cost Solution will be a seven-part certificate series developed to help employers and their key managers create sustainable savings and quality in their health benefits. The series is based on our belief that managing health insurance costs is a long-term and complex challenge that includes everything from plan design to dealing with brokers to employee education. It’s not something you master in a quick seminar. The first-of-its kind series will begin throughout the commonwealth this fall.
Massachusetts employers have a unique role to play as the largest purchasers of health insurance benefits. Almost 78 percent of insured Massachusetts residents receive their health insurance coverage through an employer.
A staggering 97 percent of AIM member employers last year identified health care costs as the one issue that keeps them awake at night. Health insurance premiums in Massachusetts have increased 50 percent since 2003, bringing the average cost paid by employers and workers to insure a single Massachusetts family through a health maintenance organization to $15,864 a year.
But the Massachusetts health care market is already moving aggressively to restructure itself in ways that will benefit engaged employers. Health providers, insurance companies and employers are working together to change the way consumers pay for medical care, introducing innovative products such as tiered and limited health plans that reward consumers for receiving high-quality care in reasonably priced settings, and implementing “global payments” that reward doctors for good outcomes instead of the number of procedures they order.
The results so far are encouraging. The average health insurance premium increase approved the state’s Division of Insurance in the small group market for April 2012 is 1.8 percent, down from 16.3 percent just two years ago. Overall, contracts negotiated by health insurers with providers in 2011 gave hospitals and doctors groups average fee increases of 2 to 3 percent, roughly half those given in 2010 and less than in any year since 2005.
Please join us in this unique endeavor to change the course of one of the most troublesome issues facing employers in 2012. How can you participate?
- Take a brief survey to help us develop a picture of the strategies that Massachusetts employers are currently using to manage health costs.
- If you are a CEO, COO, CFO, business owner or HR executive, attend one of the June forums for a practical overview of what you can do to control costs.
- Have members of your staff attend the Health Cost Management Certificate series in September and take the opportunity to have experts review your company’s long-term cost-management plan.
- Contact Sandy Reynolds (firstname.lastname@example.org) and Kristen Lepore, Vice President of Government Affairs (email@example.com) with your ideas and suggestions.
- Visit www.aimnet.org/thesolution for updated information on the educational initiative.
The landscape for protecting your valuable products and trade secrets has changed.
Ron Cahill, Esq., Partner in the Intellectual Property Department of Nutter, McClennen and Fish speaks in a new video blog about the rules that will determine the profitability of your company's innovations.
There will be much more detail when Ron leads a complimentary AIM seminar on May 15 entitled Patently Serious - New Rules for Protecting Your Ideas. The session will take place from 3:30- 5 p.m. at Lytron Inc. in Woburn.
There is no charge to attend, but pre-registration is required. To register, contact Justine Hughes (firstname.lastname@example.org) or 617-262-1180 Ext. 320.
How significant are the financial challenges facing the Massachusetts transportation and highway systems?
“The people mowing the grass are paid from the capital budget,” Transportation Secretary Richard Davey told more than 200 business leaders at the AIM Executive Forum this morning.
Davey said the plan announced this week to close a $185 million deficit at the MBTA is merely a prelude to a broader debate about how to solve a $1.3 billion annual shortfall in funding for roads, bridges and mass transit in the Bay State. The Department of Transportation (DOT) continues to squeeze savings and efficiency from its three-year restructuring, according to Davey, but he said no amount of administrative overhaul will solve the long-term financial puzzle.
“This system we have currently is one we cannot afford,” said the secretary, who took over the top job at the Department of Transportation in August after serving as general manager of the T.
The Patrick administration announced a plan Wednesday to raise MBTA fares by an average of 23 percent and to eliminate four bus routes and some weekend commuter rail service. Subway fares would climb to $2 from $1.70 – a 17 percent increase – and the cost of a bus ride will climb to $1.50 from $1.25, a 25 percent jump.
Davey called the fare hikes a one-time solution that will still leave the T with a deficit of between $100 million and $110 million next year. At the same time, he said, the T spends approximately $300 million a year less than it should to maintain its system.
The commissioner demurred when asked to endorse a single long-term solution to the financial crisis but said that the commonwealth will need a user-based system to raise revenue. He noted that Governor Deval Patrick’s proposal three years ago to raise the state gasoline tax generated significant opposition.
Davey said that the Department of Transportation has four primary objectives:
- Driving reform to save money and improve service – DOT has its lowest staffing levels in 15 years, has overhauled its retirement system and is using electronic tolling and other technology to deliver services with fewer people.
- Make reform visible to citizens – DOT is already using electronic highway signs to provide commuter information and is exploring the possibility of allowing consumers to renew licenses with smart phones.
- Transparency – The T conducted 30 public hearings and reviewed 6,000 comments before finalizing its fare proposal.
- Running DOT like a business – The agency has been merging functions and facilities, and rewarding employees for creative ideas that boost efficiency.