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.