Insurance is fastest growing expense for employers

Add one more certainty to the list: Not only are death and taxes inevitable, so is the rising cost of health insurance.

According to the National Coalition on Health Care, total national expenditures rose 6.1 percent in 2007. Slightly less than predicted, yet still twice the rate of inflation. NCHC predicts costs will continue to increase at similar levels for the next decade.

"Health insurance expenses are the fastest-growing cost component for employers," according to the NCHC. "Unless something changes dramatically, health insurance costs will overtake profits by 2008."

The Kaiser Family Foundation and the Health Research and Educational Trust say that premiums for employer-sponsored health insurance have been rising four times faster on average than workers' earnings since 2000. The average employee contribution to company-provided insurance has increased more than 143 percent since 2000. Average out-of-pocket costs for deductibles, co-payments for medications and coinsurance for physician and hospital visits rose 115 percent during the same period.

Making health care coverage an attractive employee benefit is not only a growing cost for employers, it's complicated. Large companies, such as AT&T and AmerenUE, often have many different medical coverage plans because they must negotiate with different union groups for benefits.

Jean Mason, manager of the Cape Girardeau office of AmerenUE, said that non-union employees choose from a cafeteria-type plan, choosing coverage that best suits their needs, both medical and financial. The premium and the deductible — and the coverage — are determined by the kind of coverage employees select. Ameren pays for a percentage of the costs, Mason said.

Like Ameren, AT&T negotiates for health care with unions, said Doug Mech, supervisor of employee benefits at the utility's St. Louis office. Non-union employees also have options including HMOs, but the bottom line, he said, is that employees pay about 20 percent of the cost of the premium. AT&T also offers health care benefits for retired employees. Mech said the retirees' share of the cost of that in 2005 was 15 percent of the total premium, but since that year has been increasing in phases expected to cap in 2009 at 25 percent for an individual retiree and 50 percent if the retiree is carrying coverage for a spouse.

The cost of health coverage "is still going up but we're doing a good job of managing through various provider arrangements," Mech said. "It seems like no matter what we do it continues to go up. Our premiums haven't changed a whole lot. There's not been a lot of cost-shifting. We spend full time working with vendors trying to make sure we're getting good discounts from the networks we do work with."

AT&T also offers smoking cessation classes, locally and in the St. Louis office, as well as weight management, Mech said. In addition, AT&T stays on top of pharmacy costs, encouraging employees to choose generic brands of prescription drugs as a cost-savings.

AT&T remains competitive with other employers of similar size, Mech said.

"We're trying to keep in step with Anheuser-Busch and different major employers in the area," he said. "We don't have any problems right now. The number of benefits do not seem to be a big concern in taking a job with us because of the benefits package. People are pretty much satisfied."

Other employers of various sizes say they're working hard to keep health care benefits attractive to employees.

The National Asset Recovery Services (NARS) offers a zero-deductible policy with a nominal employee co-pay for physician visits and a comprehensive prescription plan," said Christine Cervellere, of NARS media relations. Dental and vision insurance are optional.

People are spending more for health care coverage, and getting less for their dollar, with deductibles and co-pays increasing and the cost of drugs escalating. A recent study by Harvard University researchers found that the average out-of-pocket medical debt for those who filed for bankruptcy was $12,000. According to the study, 68 percent of those who filed for bankruptcy had health insurance, and 50 percent of all bankruptcy filings were partly the result of medical expenses.

It comes as no surprise that the cost of health care is the top concern among voters during this election year. The NCHC found that among Democratic voters 45 percent and among Republicans, 35 percent claim that health care costs are their top concern, well ahead of higher taxes and retirement security. Voters looking for a solution may well be disappointed.

"Policymakers and government officials agree that health care costs must be controlled," states the NCHC. "But they disagree on the best ways to address rapidly escalating health spending and health insurance premiums. ... There appears to be no agreement on a single solution to health care's high price tag.

"Experts agree that our health care system is riddled with inefficiencies, excessive administrative expenses, inflated prices, poor management and inappropriate care, waste and fraud. These problems significantly increase the cost of medical care and health insurance for employers and workers and affect the security of families."

One effective solution is wellness. Companies are finding that it pays to promote weight control, exercise and smoking cessation among their employees not only as a cost-savings but as a way toward a healthier, more productive work force.

Big River Telephone of Cape Girardeau, with 50 employees, pays 100 percent of the cost of the insurance premiums, said owner Kevin Cantwell. Employees pay a $500 deductible.

"What needs to be done is more emphasis on preventive services," Cantwell said. "Employees need to understand they have to take care of themselves."

Cantwell said he offered his employees a choice: quit smoking — through a company-paid cessation program — and Big River would pay 100 percent of the insurance premiums, or Big River would pay only 75 percent of the premiums for smokers.

"That motivated employees," Cantwell said. "Nobody at Big River smokes now. Premiums have not gone down; they're up about 10 percent, but I think productivity has gone up. I don't have 30 employees sitting outside all day smoking cigarettes, nor do I have other people who don't smoke sitting there saying 'I need to get a break.' It just seems like a healthier place."