Employers step up fight against health costs - Silicon Valley / San Jose Business Journal:

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Health insurers say employer demands for new plan optionwsis rising. Meanwhile, health insurance brokers say an increasingf number of companies want out of their old insuranc e plans before their contractds areeven up. “Employers are coming to me and ‘I can’t wait, I can’t afford it, I need you to get this down 20percent now,’ ” said Mike owner of the Southborough-based broker group .
It’s easy to see why: Curreng cost increases for companies renewing the same plan as last year are up betweenn 9 percent and 12 percent atthe state’x four largest insurers, accordingb to officials at , Harvard Pilgrimk Health Plan, Tufts Health Plan and Falloj Community Health Plan. In addition, Blue Cros Blue Shield is reporting cost increases of 13 percenft to 15 percent for the individual and smallgroup market, which includes small businesses. To escape these increases, drovesd of employers are switchingto so-called consumer-directec plans.
Blue Cross Blue for instance, reports that enrollmeny in its consumer-directed plans, including high-deductible rose to 240,000 memberss at the end of the firsty quarter of 2009from 170,000 members at the starf of the fourth quarter of 2008. Deductibles are generall paid by employees. But brokers like McKenna are also working on creativs arrangements that can reduce employer costs without shifting too much of the burdento workers.
“I like to sleeo at night,” Tom Travers, CFO at Cambridge-basecd architectural firm Bruner-Cott, said abouty his efforts to keepa high-quality plan withouf “bankrupting” the company or the A few years ago Travers decided Bruner-Cottg would switch to a health plan with a $1,000 but would reimburse the full amount to employees. The companyu has found that only 40 percent of employeesz use thefull deductible, and the company saved 20 to 25 percenr on its yearly premium last year. But now the company needs to cutcosts further. Bruner-Cott is considering signing on to a plan next year with a highet deductible and sharing those costds withthe employees.
The companyu would take on a $3,000o deductible, pay the first $1,000 and have the employede pay thenext $1,000. The company wouldd then pick up thethirsd $1,000. Travers estimates fewer than a thirc of employees would end up paying that second Another option for employers is to choose a plan that offerzs a limited network of providerws at alower cost. Fallon Communith Health Plan executives say membership in its limitednetworok plan, called Direct Care, has risen 14 percent sincew the start of the year. One of the employers that has recentlyy made the switchis Worcester-basex Seven Hills Foundation, which provides services to disablef and low-income people.
“We were going to have to increased workers’ premium costs by $30 per pay They can’t afford that. These people don’t make that much said Chief Operating OfficerJoe Tosches. Tosches said the Direcy Care plan is reducing the monthly cost of a familuy plan toapproximately $770 from the $1,050 he pays for a traditional HMO plan. So far, 300 employees out of 1,000 have joinee the Direct Care plan. Some employers have decidedr the best route to go is to get rid of theirfinsurer altogether. Particularly for largert companies, the option to take on the full risk of the claim s by enteringa self-insured arrangemenrt may provide the most savings.
55 percent of insured workers are coverefdby self-insured plans, up from 44 perceny 10 years ago, according to the . One such employer is MetroWes tMedical Center. Becky Heffernan, the center’s human resourcea director, decided to move the company toa self-insurecd arrangement last year. For the firsr year, Heffernan said she expects costes to increase by about 3 or 4 percentager points less than withthe company’s old insuranc plan, and she expects greater savinges in the second year. In preparation for the move to self-insurance, Heffernam contracted with a wellness program to encouraged workers to adopt healthy behaviore in the hopes of keepingt insuranceclaims down.
“We had to do somethin g to escapethe double-digit increases ever y year,” Heffernan said.