Benefits

How to control healthcare costs without passing on the burden to employees.

• By Flip Steinour
• 07/01/19

Nationally, healthcare costs continue to rise faster than the rate of inflation. This is a combination of new technology, new medications and increased preventable illnesses. When healthcare costs rise, employers have very few options to combat the increase. They can increase the costs for the premium share the employees pay for their coverage, or they can change the plan design to increase deductibles, co-pays or co-insurance paid by the employees. Employers simply aren’t able to cover the increased costs without help.

Many schools have switched to a qualified high deductible health plan, which means that the first costs an employee/dependent experience are borne by the employee/dependent. Employers and insurers nationwide insist this is driving employees/dependents to be better consumers because they are paying with their own money. This, in turn, saves the plan money as people are avoiding care in an effort to not spend their own money. Avoiding care today saves the plan money, but what has yet to be determined is the long-term impact of these types of plans. What we do know is that staff who don’t have a high enough income have significantly more difficulty paying these high deductibles.

Are there other options to prevent passing on the costs to the employee and allow staff to have access to quality healthcare at an affordable cost?

Yes.

On-site or near-site health centers have proved to be successful in controlling healthcare costs for many employers while avoiding the need to pass on increased healthcare costs to the employee/dependent. These types of health centers offer free or low-cost primary care, often including lab work, generic medications, wellness coaching and physical therapy.

Lancaster-Lebanon IU13 (IU13) in Lancaster, PA, with its 1,400-plus employees, implemented this solution in 2015 for its staff. Between 2015 and 2018, IU13’s medical expenses were projected to increase by 8 percent per year, from $10.1 million to $12.6 million three years later. Instead, without other changes to its health plan, IU13’s medical expenses decreased to $8.9 million three years later with an increased number of employees. In addition to the costs saved by the employer through this type of program, because IU13’s health and wellness centers are available at no cost to employees and dependents, the employees also saved approximately $750,000 over the three years in co-pays, deductibles and co-insurance costs. There was no need to increase premiums, deductibles and co-insurance for staff. In fact, IU13 decreased employee contributions to its health plan by 6 percent last year. High quality healthcare, generic medications, lab testing, wellness coaching and physical therapy offered at two locations in two counties were received at no cost to employees or dependents. These types of programs can save school districts and, in turn, taxpayers significant money!

In today’s competitive employment environment, with extremely low unemployment and most states suffering from a teacher shortage, school districts are all competing for top talent. This type of benefit sets apart school districts that have made the choice to increase premiums, co-pays or co-insurance and pass on these costs to their staff. This type of program can be a recruitment tool for schools and help decrease turnover of all staff. IU13 took this concept to the next level and not only offered this benefit to their full-time staff with health benefits, but its Board of School Directors recently added it as a benefit for part-time staff as well. The board views this as a way to differentiate IU13 from other employers for these tough-to-fill part-time positions. In time, IU13 will be able to see if it has made a difference in the recruitment and retention of its part-time staff.

In the first two years that IU13 offered this benefit to its staff, more than 125 patients who weren’t aware they had any health issues were diagnosed as being either diabetic or pre-diabetic. Free access to this quality care has allowed IU13 employees/dependents to seek medical care and be more health conscious. This is unlike some employers who have increased their deductibles, co-pays and co-insurance and whose staff are now avoiding spending their own money until they are very ill.

Over the last three years, some IU13 staff earning $11 to $15 per hour have shared that they no longer have to make a decision about whether to pay for medication for their children or pay their rent. These types of messages clearly confirm that IU13 has made an important decision to care for its staff versus passing on increased healthcare costs to them. These strategic decisions are clearly #WorkWorthDoing!

This article originally appeared in the School Planning & Management July/August 2019 issue of Spaces4Learning.