I told you so; here comes the pain (ful shtick !!! ),
TA
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( My comments in bold/italics )
October 27, 1999
Workers Face Painful Choices
As Companies Pare Benefits
By CAROL GENTRY
Staff Reporter of THE WALL STREET JOURNAL
Get ready for some painful and expensive choices in next year's
health-insurance plans.
After about five years of stable prices, many managed-care plans are raising
rates abruptly in what they say is a response to feverish demand. Sharing the
pain, some employers are increasing premiums and out-of-pocket costs.
Others are cutting back on wage increases or other benefits.
Skilled employees fare best. Most high-tech companies are absorbing
all the cost increases because they don't want to make their workers
mad enough to leave. Those who work inretailing or hospitality
may not fare as well.
( NOTE:This benefits HealthSoth IMHO because it's clinics are
located in choice aereas )
Geography matters: Companies and workers are hardest hit by rate
increases in the Midwest and South, where health plans have merged,
reducing competition. Double-digit increases are also common in New
England, where plans are playing catch-up after substantial losses.
( NOTE : This also helps HealthSouth which is located
primarily in the South and Midwest )
Size matters, too. Those who work for small employers are almost always
the most battered by price hikes, or by a decision to switch to a leaner plan.
Large self-insured companies often have more of a cushion, but there are
exceptions. Minnesota Mining & Manufacturing Co. in St. Paul, Minn., is
taking a 20% hit that will drive prices up $24 million.
The news isn't all bad: Four out of five companies surveyed by the
Washington Business Group on Health, a nonprofit business-membership
organization, said they had no intention of reducing health coverage
significantly in the next 12 months. Instead, they said, they are tweaking their
existing plans.
But some tweaks will hurt. University of South Florida professor Jay
Wolfson discovered one a few days ago when he took five regular
prescriptions for his family to his pharmacy and the clerk asked for $100 --
more than twice what they cost him before.
'Dramatic Awakening'
As a health-policy expert, Dr. Wolfson knew that health plans had to raise
prices to keep from going under. And he knew they would concentrate on
the fastest-rising cost, which is for prescription drugs. But it was still a
shock. "People are about to experience a dramatic awakening," he says.
Ouch!
It's health-plan re-enrollment time, and some employees are passing along some of their
higher health costs to employees. Here are some of the changes workers may see:
Premiums up by 5-10%
Office visits up by $5
Fewer plans; maybe just one
Different plans for bosses vs. rank and file
High prices for brand-name drugs
Disappearance of traditional insurance
Voting on plans
Medical savings accounts
Source: WSJ
Elaine Powell-Belnavis is going through such a drama. An
economic-development specialist for the U.S. Small Business Administration
in New York, she is now enrolled in a plan allowing some flexibility in its
choice of doctors. A switch to a strict health-maintenance organization
means losing the gynecologist she has gone to for 20 years and a change of
pediatricians for her children. But it also means "an extra $50 or $60 in my
paycheck, and that's a lot of money," she says. "I'm going to take a shot at
it."
Here are some novel strategies some companies are trying out:
Containing prescription-drug costs. Three-tier drug-pricing systems
have become the norm at HMOs. The idea is that patients make a modest
co-payment for generics and pay somewhat more for a brand-name drug on
the health plan's approved list and a high price for a brand name that's not on
the list. A typical three-tier plan charges co-payments of $10, $20 and $30,
although some charge as much as $40 for an unapproved brand.
Helen Darling, practice leader for group benefits and health care for
human-resources consultant Watson Wyatt Worldwide, takes another
approach: She urges her corporate clients to have workers pay a percentage
-- say, 20% -- instead of a flat fee. Fixed fees totally remove consumers
from contact with real prices, she says.
A double standard for health benefits. Some companies provide less
coverage for the rank and file than for upper-level managers. David Boose,
president of PestMasters Inc., a pest-control business in Richmond, Va.,
says he covers family members for the managers but can't afford to do so
for his 16 technicians and salespeople. "I'd like to be able to pay all of it for
everybody," he says.
Will Keene, who with his brother Hank owns Edson International, a
boat-hardware business in New Bedford, Mass., says a salesman recently
suggested they buy a wide-choice plan for themselves and a strict HMO for
their workers. They considered such a deal immoral, Will Keene says, and
threw him out.
Democratic decision making. Some small employers now are letting
workers vote on the company plan. Lynn Bowles of Scherr's Refrigeration
Co. in Richmond, who pays 50% of the bill for her eight employees, draws
up a chart that shows the various plans' deductibles, co-payments, premiums
and drug coverage. The workers meet the plans' salespeople for questions,
and then they vote. "Usually they choose the good plan," Ms. Bowles says.
"Whatever they choose is what I personally have."
Large companies, where direct democracy is less practical, can accomplish
the same thing by covering the cost of the least expensive plan and letting
workers who want deluxe plans pay the difference.
Ending subsidies. Because most healthy workers gravitate toward
lower-cost managed-care plans, the traditional insurance plan becomes
weighted toward the ill and thus unaffordable unless employers help on the
premiums. Increasingly, employers are dropping the subsidies, because they
want workers to move into managed care.
Blaine Bos, a principal in consultant William M. Mercer's Chicago office,
thinks the worst is yet to come and workers won't face seriously painful
changes until next year. He says that historically, when health-care costs
start rising after several years of calm, employers don't slash benefits until
the third straight year of price increases. At most companies, this is the
second year. Next year, Mr. Bos says, employers will begin looking for
ways to shift more of the burden to employees -- especially those who use
the health-care system the most.
Michael Anderson, benefits manager at 3M, says his workers will be hit by a
serious premium increase next year if they continue to use the system as
heavily as they have done so far this year.
"We can't have another 15% to 18% increase in 2000," Mr. Anderson says.
The company has set up stop-smoking programs, Web sites with health
information and 24-hour nurse answer lines and is providing other resources
to help workers cut spending.
Says Mr. Anderson: "We're telling them, 'It's really up to you now.' " |
