How to control healthcare costs without passing on the burden to employees.
- By Flip Steinour
- July 1st, 2019
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
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 July/August 2019 issue of School Planning & Management.
Flip Steinour is assistant to the executive director and chief operations officer at Lancaster-Lebanon IU13 in Lancaster, PA and executive director of the Pennsylvania Association of School Personnel Administrators (PASPA), a state affiliate of the American Association of School Personnel Administrators (AASPA). Special thanks to AASPA for their invaluable assistance with this column.