Barring a political Hail Mary, in all likelihood Congress will not pass a health care overhaul bill this year.
Jon Rauser, a state health care advocate for small- to medium-sized businesses and president of The Rauser Agency, doubts government could afford the reforms anyway.

“Whether it’s in Washington or Madison, you cannot tell me with a straight face that you are going to insure 45 million new people for less money,” he says. “We have no money; the deficits are out of control.”

An incompletion on the health care play doesn’t mean that business shouldn’t take a time out to re-evaluate their internal health care programs and ways to cut costs.

Because national reform sought to increase coverage among uninsured and under-insured populations, John Torinus, president of BizStarts Milwaukee and CEO of West Bend-based Serigraph Inc., anticipated businesses that already provided coverage would see higher health care premiums as a result. “Health care reform wasn’t going to help small businesses at all,” he says.

He advises business owners to stop waiting for reform and “get their heads in the game” to address skyrocketing health care costs. According to Torinus, businesses can dramatically reduce health care expenses in four primary ways:

• Reducing insurance coverage and asking employees to contribute more.

• Creating tax-exempt health savings accounts to offset higher co-pays.

• Keeping employees healthy through wellness programs and better access to preventative care.

• Offering comprehensive disease management programs.

“With good intelligent and aggressive management and collaboration with your employees, you can get these costs under
control,” Torinus says. “You have to change the model. You can’t keep doing it the same old way.”

Buy less insurance

Torinus has developed a health care model for small businesses based on his own experiences at Serigraph, which has taken a variety of steps to address high health care costs.

He gives the following example of how his model works: A company employs 10 people. Right now it pays approximately $15,000 a year to insure a family of four. If the company moves to top-bottom coverage, meaning it covers primary care through a preventative care doctor then purchases a high-deductible policy, it will greatly reduce its health care expenses. It will cost the company approximately $2,500 to secure primary care for the family through a health care service firm focused on primary and preventative care, while a $6,000-deductible family policy will run the company approximately $5,000. Putting $2,500 into a health savings account covers higher deductibles.

“That’s a total cost of $10,000 and considerably less than you would have paid,” he says. “You get the ultimate in primary care, catastrophic coverage, and in the middle you’ve got the employee’s head in the game because they are paying their medical bills out of their health savings account.”

Buying less insurance greatly changes how employees utilize health care, agrees Rauser, who’s Milwaukee firm offers health insurance solutions for small businesses in Milwaukee, Racine, Kenosha, Ozaukee, Waukesha and Washington counties.

Purchasing a $5,000-deductible policy instead of a $500 policy and splitting its cost 50/50 with employees means employees see a percentage of every claim, if not the entire claim. According to Rauser, employees then become more engaged in the cost of health care because they are footing more of the bill.

Reimburse health care expenditures

Cutting coverage or asking employees to contribute more may be a logical step in reducing small business health insurance costs, but the downside is that without something to help offset these expenses such measures may be unpopular with workers.

Picking up a consumer driven health care (CDHC) insurance plan and allowing members to use health care savings accounts mitigates these concerns, says Torinus. These accounts help employees pay for routine health care costs, while high-deductible insurance protects them from catastrophic medical expenses.

When Serigraph employees select the $1,500 deductible family plan (that’s $1,500 per person in the plan), it drops their yearly premiums by approximately $1,500. The company puts $3,100 into a health savings account and encourages employees to place some money in it as well. This money pays health care costs until deductibles are satisfied.

“We put the money into the account, and it’s up to employees how they spend it,” Toriunus says. “If they don’t spend it, it’s theirs to keep. As a result our employees are very careful about spending health care dollars.”

For example, he says they rarely go to the emergency room, where a visit may cost them $600 versus $160 if they wait for an office visit.

He explains it’s simply a different way of putting health care funds out there. In a traditional plan, the employee and company pay for a high premium and health care expenses are virtually free, minus minimal co-pays. “When stuff is cheap and free, people over-use it,” he says. “This new model has an immediate impact on over-utilization.”

Rauser states he routinely recommends this approach to business clients. “It’s nuts to have a $500 deductible when a $3,000 deductible will save you 30 to 40 percent on premium costs,” he says. “If you buy that low deductible and no one uses the plan, the insurance company doesn’t send you a refund. It’s far more judicious to buy less insurance and help the handful of employees who actually incur claims.”

Boosting worker health

“Stick to the knitting around what will control health care costs among your work force,” recommends Leo Brideau, CEO of Milwaukee-based Columbia St. Mary’s. The best way to do this, he says, is to keep workers healthy.

“People don’t seek out health care services because it’s a lot of fun,” he explains. “They do it because they are sick and need care.”

The solution lies in wellness programs and preventative care, he says. Columbia St. Mary’s provides lower health insurance premiums to every employee who completes a health assessment form. Their answers provide the hospital with a snapshot of worker health issues. “You take this data and look at what you can do to prevent these problems,” Brideau says.

When assessments showed back problems as the main source of on-the-job injuries, the hospital began adding power lifts and slings to patient rooms and examination areas to prevent them.

Beefing up primary and preventative care offerings also keeps the workforce well, says Torinus. Serigraph employs an onsite nurse practitioner, dietician, chiropractor, acupuncturist and physician to keep regular office hours and provide free primary care.

The company also requires every employee to have an annual physical and offers free preventive tests including mammograms, colonoscopies, pap smears, etc. “We are trying to keep people out of the hospital,” Torinus says. “You get in the hospital and it’s $7,000 a night.”

He adds these changes tremendously impacted employee health. Since 2003, the company’s average cholesterol dropped from 209 to 197 and its diastolic and systolic blood pressure fell by three points. The company’s average Body Mass Index (BMI) didn’t change as much as hoped, so Serigraph recently retooled its obesity programs. “It’s all through exercise and diet and employees receive a lot of coaching,” he says. “If an employee has a problem with weight, we surround them with help.”

Wellness programs like these are not cheap, Torinus admits. But he says he made a “businessman’s bet” that he’d get his money back in the end. So far it’s worked out. “We’ve only raised our health insurance premiums twice in six years,” he says. “But they are skyrocketing in other businesses.”

Studies have shown the return on investment for workplace wellness programs can be up to three times their cost. “We tell employers that it’s free,” Brideau says. “You have to put the money up front, but it’s free.”

Manage chronic disease

“We know when you take any large population, that 20 percent of the people are responsible for about 80 percent of health care costs,” says Wisconsin State AFL-CIO President David Newby, who is also active in health care reform. “These are the folks who have at least one serious health problem and often multiple problems.”

He recommends treating these individuals in a coordinated manner. A team of doctors should work together to aggressively treat these individuals’ health problems, in terms of best medical practices and in terms of follow-up to ensure they take their medications, follow their diets and get the exercise they need. “These programs can make a real difference in the health of these individuals long-term,” Newby says. “The result is you reduce your expenses for the 20 percent of the population responsible for 80 percent of your costs.”

Rauser suggests rewarding employees with points for each health-related item they complete. Employees can earn points for completing health risk assessments, following diet programs, taking smoking cessation classes or participating in exercise programs. They can use these points to reduce insurance premiums. “It just gives them an incentive to stay well and change lifestyles,” he says.

A winning proposition

Changes like these can be a boon for businesses and the people they employ, says Torinus, noting there are seven primary benefits from these health care initiatives.

• Insurance premiums do not rise as fast, if at all.

• Deductibles and co-pays go down because the company buys health care at lower prices.

• Employees receive free primary care.

• Employees get money back for being good consumers.

• The company that isn’t spending as much on health care can afford to do other things for employees, like offering profit sharing or giving raises in a tough economy.

• Lessened health care spending helps keep companies competitive and adds to job security.

• The workforce is healthier overall.

“Employees come out the winner on these changes in every which way,” he says. “The company comes out the winner, too. It’s a win-win situation for everyone.”

By Ronnie Garrett

Ronnie Garrett is the Editor of Corporate Report Wisconsin.

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