Businesses that have raised health insurance deductibles and co-payments for their employees, created wellness plans and devoted more time and energy to consumer education have been able to lower the annual increases in their health insurance premiums, according to an annual survey by the Madison-based insurance brokerage Mortenson Matzelle Meldrum Inc. (M3).
M3’s study examined about 500 health plans offered by clients, most of which are based in Wisconsin.
Insurance increases were about 15 percent in 2002, but the increases fell to 8 and 8.2 percent for 2005 and 2006, respectively, the study states.
Public plan premiums rose 12.2 percent this year, compared with 7.8 percent in the private sector.
About 36 percent of health plan renewal increases were less than
5 percent, the report states, while another 29 percent were between 5.1 and 10 percent for 2006.
"After several years of focusing on the plan design within health benefits, many of M3’s clients are beginning to embrace long-term strategies like employee education, consumerism and wellness programs to control health care costs," said Jesse Oberloh, senior risk manager at M3.
By raising deductibles and co-payments, companies are able to save money for the short term. Initiatives such as wellness programs, employee education and encouragement of consumerism can result in long-term savings, the survey states.
Wellness programs can help reduce absenteeism and employee turnover, while boosting employee morale and productivity. Although the programs cost money to start and maintain, that money is recovered by most businesses through increased productivity, the study states.
Wellness programs can also reduce health insurance claims if employees are healthier and getting sick less often. Businesses with fewer health insurance claims may be able to negotiate lower health insurance rates.
Employers are best able to encourage consumerism by stressing education and having employees pay a larger share of health care costs from their own pockets, Oberloh said.
"With the education piece, it will make people aware how much it’s costing them and their employer," he said. "We’ve seen a revival of our clients being more interested in providing benefit statements (to employees). They show how much it costs them to provide insurance and time off to employees. The more that piece of the pie keeps growing, the less employers have to pay wages and salary increases."
High deductible plans, encouraging employees to be consumers, and enacting wellness plans are not magic bullets, Oberloh said. Although many employers have been able to save money by switching to high deductible plans and increased co-pays, those are one-time savings, he said.
"Plan design alone will but curb your costs," Oberloh said. "Plan designs will get you where you need to be this year, but they will not address the next three to four years. The responsibility has to fall back on individuals who are receiving the care."
