Price of health
According to the National Coalition on Health Care in Washington, D.C., premiums for employer-based health insurance increased 7.7 percent in 2006. Premiums for smaller employers saw an average increase of 8.8 percent, and companies with fewer than 24 employees saw increases of an average of 10.5 percent.
Glass company executives say their health care costs have ballooned more than 30 percent in the past three years alone. Both companies and their employees are feeling the effects.
“Besides the cost of gasoline, I don’t know of anything with more runaway cost increases than health care insurance,” says David Byruch, chief financial officer for J.E. Berkowitz LP in Westville N.J. “Every company deals with [the increases] differently. If there was an easy plan, it wouldn’t be at the epidemic level that it’s at.”
Jim Wendorff, vice president of human resources for Viracon of Owatonna, Minn., agrees. “Ten years ago, our executive team was aware of the burden of health care costs, but it did not come out as a top priority,” he says. “Today, it is a top priority for not only [human resources] executives, but all top executives.”
Who covers the costs?
According to the NCHC, employers in 2006 paid an average of $11,500 for a family of four, with workers contributing 10 percent more than they did a year ago.
Glass company officials, such as Lyle Hill, president of MTH Industries in Chicago, say they have tried to swallow costs at the business level for as long as possible. However, the size and frequency of the increases have become too much, he says, so employees now have to share in the burden.
“We felt we had three options: we could pass them along completely, reduce the coverage or do some combination. We chose the third and blended the options,” Hill says.
While employees never take rising deductibles and premiums easily, Hill says open communication can help. For the most recent policy increase, MTH gathered all non-union employees at an open house and let them vote on the options.
The open discussion also allows company executives to assess the health care needs of its employees, so the company is not paying for coverage that goes unused, Hill says.
“Everyone is affected differently,” Hill says. “In this Chicago location, our staff is a little older, so maternity benefits are no longer an issue. Certain other coverages, like dental, are very important.”
Byruch says J.E. Berkowitz works within its insurance provider to create several policy options for employees; workers can choose from three plans, he says.
“We try to provide choices that best befit the general needs of the population we’re trying to serve,” Byruch says. “Somebody may choose a plan with a high deductible and lower premium, or a high premium with lower deductible.”
Show me the money
Despite all the money companies put into health care plans, Pitman says some workers still don’t recognize the benefit they receive from the policies.
“There are people like that who don’t see beyond the noose,” Pitman says. “We’ve had people go to the competition because they’ll get a 50 cent raise, even though they will lose their health insurance.”
To help employees recognize the gains they receive in their benefit packages, Bill Evans, president of Evans Glass Co. in Nashville, gives every employee an itemized list of everything the company puts into each individual.
“On this sheet, we list worker’s compensation, matching taxes, unemployment charges, health care, cell phone—anything we might be covering for that employee,” Evans says. “I try to simplify that the company has expenses that each employee benefits from—benefits an employee might not see until there’s a need.”
Evans provided two examples of this form on Page 59 of the January 2005 issue of Glass Magazine. In one example, the company paid $6,735 in benefits for an employee. The yearly salary for that employee was $32,240. Once the benefits were included, the salary equaled $38,975, about a 21 percent increase.
See pages 58-59 of the January 2005 issue for examples of Evans’ benefit forms.
A consumer-driven approach
Owatonna, Minn.-based glass fabricator Viracon, along with all other subsidiaries of publicly held Apogee in Minneapolis, switched to a consumer-driven health care plan about four years ago to manage costs.
“We saw some employees who would access health care inappropriately—stopping in at the emergency room with a sick child because they don’t have a family practitioner, or don’t have some basic items in their medicine chest,” Wendorff says. “The consumer-driven plan lets our employees manage their costs. They are more aware of their healthcare costs, and they are making better choices.”
A single-person plan includes: $500 from the company for preventative health care, such as an annual physical; a $1,500 deductible with the first $750 paid for by the company and the second half by the employee; and an 80/20 co-pay for anything beyond the deductible. The company covers 100 percent of costs beyond $1,800 out-of-pocket from the employee co-pay costs.
So, the maximum an employee would pay in a year for single coverage is $2,550, Wendorff says.
The family plan is double the single, with a maximum out-of-pocket of $5,100.
“We wanted to create awareness among employees that health care is expensive,” Wendorff says. “We tell them that the company takes care of the first half [of deductible expenses], but you take care of the second half. So, be a wise consumer.”
Employees under the plan are more likely to make choices such as using generic drug alternatives to save money and prevent cutting into the employee portion of the deductible, Wendorff says.
Viracon’s plan also includes a rollover benefit for healthy employees. If an employee doesn’t use the entire company portion of the health fund—$750 for a single-person plan and $1,500 for a family plan—the extra will rollover to the following year, Wendorff says.
Heath education saves lives and money
Many glass company executives have also started taking a proactive approach to health care by encouraging healthy lifestyles among employees.
Healthier employees mean fewer doctor visits and lower medical costs, something companies desperately need in a time of rapidly increasing health insurance costs. Many glass companies have started in-house education and incentive programs to encourage employees to live better and healthier.
“Prevention is much less expensive than paying for doctor visits,” Wendorff says. “We’ve developed several in-house programs, including smoking cessation and a Weight Watchers-type activity.”
Viracon also runs health fairs, profiling employees’ health to gain baseline health information and recognize risk areas. Based on that information, Viracon pairs employees with a coach who will identify high-risk areas and develop a program with the employee to improve their overall health.
“They’ll say, ‘You’re 40 pounds overweight, you smoke and have high blood pressure. Let’s put a program together that might help you move toward a healthy lifestyle,’ ” Wendorff says.
Bill John, president of InterClad in Minneapolis, says his employees have similar opportunities offered through the Egan Wellness Committee, part of InterClad’s parent company Egan Cos. of Brooklyn Park, Minn.
The committee helped set up an exercise room at its corporate headquarters—complete with amenities such as a locker room and sauna—that employees use for free.
The company also started the Egan Challenge to motivate employees in health competitions, John says.
“We challenge all employees to reach certain set personal goals. It got everyone energized, and participation was good,” John says.
Arch Aluminum & Glass Co. of Tamarac, Fla., ran its own competition—a Biggest Loser type contest to promote weight loss, says Max Perilstein, vice president of marketing for the company.
“We had 445 people nationwide take part, and the top 10 ‘losers’ lost a combined 415 pounds,” Perilstein says. “We offered prizes and recognition. People really got into it, and they got healthier in the offing.”
Arch also publishes a bimonthly newsletter promoting its health savings account and offering tips and advice for staying healthy.
Wendorff says large and small companies alike can benefit from hands-on education programs.
Corporate medical coaching and education ex-tends into all industries. Go to www.businessweek.com/magazine/content/07_09/b4023001.htm to read an in-depth article from the Feb. 21 edition of BusinessWeek about one company’s highly involved plan to reduce medical costs by changing employees’ lifestyles.
No matter what approach American businesses use, executives need to be proactive about controlling health care costs. According to the NCHC Web site, if costs continue to rise at their current rate, health insurance costs will overtake profits by next year. Learn more about this issue at www.nchc.org.
This article is an extension of two parts in the four-part e-glass HR Special Series from e-glass weekly. To read about employee incentives and retirement benefits, see the Feb. 6 and Feb. 13 editions of the newsletter at http://newsmanager.commpartners.com/nga/issues/. To subscribe to e-glass weekly, visit www.glassmagazine.net/eglassweekly.htm.