Wednesday, December 11, 2002

Are health increases lower here?

Some question report

By Tim Bonfield
The Cincinnati Enquirer

A report this week that some large Greater Cincinnati employers have found a way to beat 15 percent nationwide increases in health benefit costs was met with surprise and skepticism Tuesday.

The report, from Mercer Human Resource Consulting, stated that 27 large Greater Cincinnati employers (with 500 or more workers) experienced an average 2.6 percent increase in actual health benefit costs. That was far below the 10 percent increase reported for large employers elsewhere in Ohio and the 11.5 percent average nationally.

Several human resources executives, consultants and others familiar with health benefits immediately questioned the results, because the cost increases their companies have seen have been far higher than 2.6 percent.

Others, however, said that the dramatic figures indeed were possible, but only if employers made drastic changes to health benefits packages - changes that could be harsh news for employees if a family member gets sick.

"Those numbers can't be accurate," said Rich Cross, president of Cross & Associates, a Cincinnati-based benefits consultant. "We have not seen any clients with increases as low as that. The smallest we've seen is 7 percent."

Officials at Procter & Gamble Co. were among the employers expressing surprise.

"Our numbers for our Cincinnati area health care plans actually mirror what they found for Ohio in general," said company spokeswoman Jeannie Therrington.

John Sinclair, health care and practice leader for the Cincinnati Mercer office, said that local employers have been aggressive about cutting costs this year.

Many have started charging more for medications and doctor visits. Some have reduced subsidies for vision and dental care, which often were already weaker than regular medical benefits.

Some have switched carriers to seek a better deal. Others may be getting savings from disease management programs that try to control care costs for chronic illnesses such as asthma and diabetes.

Some of those surveyed may simply have had fewer big health claims than the year before.

Some Tristate residents have no doubt employers are making serious changes in health benefits.

Deerfield Township resident Karen Pinskysaid the health benefits she has through her husband's company went from one in which the business picked up 90 percent of the cost to 70 percent.

"Our monthly contribution went up 27 percent and our covered benefits decreased. Our co-pays all went up at least 25 percent."

The 27 employers that responded to Mercer's survey - which were not identified by the consultant - reflected a range of private and public employers, some with unions, some with no unions. The changes they reported ranged from 20 percent increases to 10 percent reductions in health benefit costs, with the average working out to a 2.6 percent increase.

One key cost control factor cited by Mr. Sinclair: More employers are switching from health maintenance organizations (HMOs) to preferred provider organizations (PPOs).

In an HMO, the paycheck deduction for coverage often is higher than a PPO, but co-payments for HMO members may be as low as $10 to see a doctor. And HMOs usually offer 100 percent coverage for hospital care, or charge a flat fee of a few hundred dollars. In a PPO, employees can face paying 20 percent or more of the health care bill if a family member gets sick. For hospital care, families could pay $1,000, $5,000 or more before out-of-pocket spending caps - set by the employer - kick in.

But can switching to a PPO save enough money to defy national cost trends? Possibly, says Grant Cully, president of the local Benefits Network Insurance Agency. PPOs that come with multithousand-dollar deductibles can save an employer 8 percent to 14 percent compared to some HMOs, he said.


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