Reining in Health-Care Costs
Universities have been more creative recently in controlling rising health-care costs for faculty and staff members. It's a defensive move: Premiums for employer-sponsored health insurance have been rising dramatically--premiums went up 59 percent, or five times the rate of inflation, between 2000 and 2004, according to a Health Research and Educational Trust survey. Still, cost-saving options are available, from self-insurance plans to stronger wellness programs to giving employees the chance to have telephone consultations with health-care providers.
Central Michigan University (CMU) has taken the self-funding route in the past two years to help control its medical costs. The school's estimated savings in the first year of self-funding (compared to its previous, fully insured approach) neared $1 million.
CMU is now partnering with the other public universities in Michigan to pursue a collaborative purchasing arrangement. While this initiative is still in process, it promises significant long-term savings potential.
Other strategies include embracing stronger wellness programs and incentives to help change behaviors. A new wellness program model will phase in incentives over three years, explains Lori Hella, director of Benefits and Wellness, Human Resources, at the Mt. Pleasant, Mich.-based institution. The rollout plans look like this:
on topics that correlate
with high claims areas
help employees learn more
about staying well.
In year one, most employees and spouses covered by CMU insurance can take an online health-risk appraisal (HRA). Questions cover family and personal health history, weight management, nutrition, physical activity, stress, skin protection, injury prevention, and other areas--helping to raise self-awareness about behaviors. CMU staff members then aggregate data from the questionnaires and target wellness efforts based on the major health problems and risk factors identified. "The data can also be used to generate return-on-investment and other outcome measures when compared to health-care cost data," Hella notes.
In year two, the wellness program will contain four major components (including the HRA). Employees will receive a cash incentive for each component completed. They can pick and choose how many components they wish to participate in, based on their readiness to change behaviors, such as by getting an annual physical and preventive screenings or by exercising more regularly.
In year three, for those employees who are covered by CMU's self-funded insurance and who also participate in all four of the wellness program components, there will be a gain-sharing model implemented. Any surplus funding from the insurance plans will be shared with employees as a reward for keeping claims costs down as a result of their wellness behaviors.
"While this new program model is just in its infancy for us, we are excited by the prospect of strengthening the correlation between wellness behaviors and health-care costs," Hella says.
But CMU efforts don't end there. A health-care committee provides input to help control benefit costs by educating colleagues, while at the same time helping to recommend plan designs and programs--ones that consider employee needs while helping the university to achieve cost control/savings. The committee consists of representatives from each of CMU's employee groups. Its role is to stay abreast of health-care and benefit issues that impact both CMU and the individual employees, as well as to recommend possible solutions.
The committee has been instrumental in the development of new medical plan designs, which led to movement from traditional plans to PPO models, and from a fully insured to a self-insured funding method. Other actions have included collaborating on the development of new wellness programs and implementing weekly listserv messages pertaining to wellness topics that correlate with high claims areas, in order to help raise awareness of wellness issues and change behaviors, explains Hella.
A huge challenge for employers today is balancing the mandate to control benefit costs with the need to attract and retain a high-quality workforce. Supplemental benefits are one way that colleges and universities are meeting this challenge with a flexible solution.
Supplemental offerings weren't usually a part of traditional employee benefit plans, and they didn't get much attention from employers even 10 years ago. However, as carriers began refining supplemental benefits with more desirable features and integrated services, they evolved over time to become attractive to HR managers. Now they're recognized as an integral part of mainstream benefit planning, notes Neiciee Durrence, vice president of life product development at UnumProvident, a provider of group and individual disability income protection insurance in the United States and United Kingdom.
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need to attract
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"Supplemental benefits can help employers stretch their benefit dollars while offering a more robust benefits program," Durrence says. This flexible coverage helps meet diverse and changing employee needs and can also "be an effective remedy for health-insurance premiums that are now increasing at five times the rate of inflation. In fact, employers are turning to supplemental medical and other voluntary benefits, such as critical illness and accident insurance, to fill coverage gaps left by higher deductibles and co-payments, and to help employees meet non-covered out-of-pocket expenses."
TelaDoc Medical Services provides another way of addressing health-care costs. This national network of physicians conducts telephone consultations 24 hours a day, seven days a week, 365 days a year, for a $35 consultation fee. Approximately 94 percent of requests for medical care can be addressed over the phone, found a TelaDoc test of 6,000 people, including University of Texas Medical School staff.
TelaDoc literature claims that self-insured organizations using the service save an average of $200 per employee, per year, because less doctor and emergency room visits are necessary. Employers can make the phone option a more attractive one for staff--and save on insurance premiums at the same time--by raising its members' health-care deductibles to lower the cost of insurance for everyone. It's a solution that employee advocates would scoff at, but Gary Wald, executive vice president of TelaDoc, notes that it does put more control in the hands of patients, who can choose what type of health care they want.
Here's how it works: New members complete a detailed health history form. When a physician's assistance is needed, the person can dial the TelaDoc number, and once a doctor from that state checks the person's medical history, the member gets a call-back. Seventy percent of TeleDoc physicians are board-certified, and all of them can prescribe medication. Like with a primary-care physician, they can also call prescriptions in to the member's pharmacy of choice.
For institutions located in rural areas where access to physicians is compromised, a service like this can be particularly attractive. After all, when people are forced to spend significant time out of the classroom waiting at doctors' offices, emergency rooms, and urgent-care facilities, it takes away from the mission of education.
Laura Gater (firstname.lastname@example.org) is an Indiana-based freelance writer who writes frequently on human-resource issues for a variety of business and medical magazines.
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