Companies get creative to deal with rising health care costs

Michael Morton

With insurance premiums on a relentless rise and many companies conducting their annual enrollment, area executives and benefits advisers report higher costs for employees and an increasing reliance on programs promoting health.

Those programs range from medical history and behavioral questionnaires used for tailored interventions to higher employee contributions for smokers declining to join company-sponsored cessation offerings, said local adviser Mark Abate.

"It's getting more and more common regarding smoking to have that tiering," said Abate, whose Strategic Benefit Advisors in Southborough deals mainly with companies employing 100 workers or more.

With at least two-thirds of firms preparing for a Jan. 1 start date for their next year of insurance coverage, Abate said his clients are facing an 8 percent to 10 percent premium hike.

For smaller firms, the spike will likely range from 12 percent to 13 percent, said Jon Hurst, president of the Retailers Association of Massachusetts.

"When is Massachusetts health care reform going to show any benefit for the small business?" he asked. "You wonder what's going on here."

The state's 2006 overhaul requires companies employing the equivalent of 11 full-time employees or more to offer insurance or pay a penalty, with steeper contribution requirements for firms with at least 50 workers.

To control costs, Abate said his clients have frequently raised deductibles and co-payments, an immediate and tangible impact. But many have also offered wellness programs, asked workers to complete questionnaires and singled out smoking. With those efforts, the effectiveness and return can be harder to gauge.

"Some organizations do it because they think it's the right thing to do and they know in their hearts there will be a payoff," Abate said. "Others are looking for a more direct payout."

Typically, questionnaires are turned over to insurance companies for direct intervention on health problems like diabetes.

At Hopkinton-based EMC Corp., the surveys ask about family history, weight, exercise, sleeping, smoking and other factors but are passed to a third party. The consultant uses the data to suggest individuals change their lifestyle, such as diet or proper management of chronic conditions, and makes larger group presentations.

Employees who fill out the questionnaires pay 12 percent less on their premiums, but there is no penalty for failing to comply with lifestyle recommendations.

"This is about driving employee good health," said Delia Vetter, EMC's senior benefits director. "We're encouraging them, we're really creating the environment at EMC to foster healthy lifestyles."

Among other efforts, EMC tested a program with Boston University's public health and medical schools to provide tailored diet and exercise information over the Internet. It also ran a pilot program where 200 employees tested their blood pressure at home each day and received advice online.

For wellness, Abate said his clients have started nutrition, walking and exercise programs, including some where gym attendance is monitored by swiping electronic cards at check-in. Larger firms can analyze claims data and customize programs, while the rest use standard products.

When it comes to premiums, Abate said companies can charge more based on workers' actions, but not their status.

For example, because of nicotine's addictive quality, smokers cannot be charged more automatically, but they can if they decline to participate in company-sponsored cessation programs. Reporting and compliance is largely based on the honor system, though managers might be apprised of what workers have indicated.

"Some people could actually lose their jobs if they're caught smoking and they've lied," Abate said.

Although none of his clients charge fast food eaters more or plan to, Abate said the law would allow it, since they would not be penalizing weight. Doing so, however, would rely even more on the honor system and involve an additional investment by human resources.

"You have to worry about how that's going to be administered," he said.

While EMC employs a somewhat different model than many firms it uses an insurance company largely for administrative purposes and pays most employee claims itself Vetter said her firm's health care costs aren't rising as steeply as before.

At Framingham staffing agency Selectstaff, President Jo-An Gladstone said smaller firms like hers could offer questionnaires and wellness programs and still not get a break from an insurance company.

"It would make no difference," she said. "We're treated completely differently (than bigger companies)."

Given rising premium costs and revised state regulations that would have left her paying penalties anyway, Gladstone dropped employee health insurance earlier this year.

"That was not an easy decision," she said. "It took me months of sleepless nights."

While the Massachusetts Association of Health Plans industry group could not be reached for comment, it has attributed premium increases to spiraling charges from health care providers.

Hurst said smaller firms have been asked to subsidize the somewhat better deals obtained by bigger companies with bargaining power.

During ongoing hearings before the state Division of Insurance on the subject, he has called for insurance providers to acknowledge smaller firms' wellness programs and for the state to re-establish pool-buying powers and impose a one-year freeze to halt rate hikes.

"The problem here is that we're seeing that every single year," Hurst said.

Michael Morton can be reached at 508-626-4338 or mmorton@cnc.com.