Health Insurance Headaches
THE GOOD NEWS is, United States printing shipments grew at a robust pace over the first quarter of the year, up 4.2 percent ahead of last year’s first quarter, and total U.S. printing industry production could reach more than $170 billion for 2006, reported Ronnie H. Davis, Ph.D., vice president and chief economist for the Printing Industries of America/Graphic Arts Technical Foundation (PIA/GATF), Sewickley, Pa. Printers’ prices were also up an average of 2.2 percent from last year’s levels—the highest rate since before the 2001 to 2002 recession—indicating a strong print market is providing printers some pricing leverage.
The bad news is, operating costs such as energy/utilities, employee health insurance and paper are escalating, up by 7.8 percent compared to last year. “The need to focus on cost-control and productivity gains is as strong as ever,” Davis observed. “Just for health insurance alone, costs are up 9.2 percent over the past 12 months, and wages and salaries are also rising fairly significantly at 4.3 percent. About 2 percent to 3 percent of total sales now go to pay for employee health-care cost, so it is a significant cost issue for printers,” he continued. “I believe that health-care costs will continue to increase at a faster pace than overall costs, and it will remain a problem for both firms and employees, as more and more of the costs will be off-loaded to employees.”
In addition to printing industry research, surveys conducted by various organizations further indicate the cost factor for keeping employees healthy is making business owners sick. Understanding the ill effects a less-than-attractive benefits package can have on recruitment efforts also keeps them up at night.
Headquartered in Nashville, Tenn., The National Federation of Independent Business (NFIB) reported two-thirds of its members cited health-care costs as a critical problem, and believe workers’ health benefits are issues when competing with large companies for top candidates. “Employee health insurance was the greatest concern, with workers compensation and product or professional liability ranking second and third respectively,” said President Todd Stottlemyer.
Tuckahoe, New York-based insurance seller Chuck Rollins, president of The Rollins Agency, said controlling benefit costs has been difficult—if not impossible—for his clients over the past 10 years. And, while many companies put benefits programs out for bid every two or three years, seeking the lowest premium possible, he pointed out that this practice may expose them to unnecessary administrative burdens and could actually increase the total cost of their benefits program.
Rollins also cited a 2004 survey by the Economic Benefits Research Institute, Redmond, Wash., in which 79 percent of respondents said they base their decision to accept or reject potential employment on the company’s benefits program. “Businesses are learning that insurance premiums are just one facet of the total cost of benefits,” he said. “The structure and design of a benefits program has a direct impact on key areas, such as productivity, employee turnover and administrative costs. The challenge is to strategically design and manage a benefits program that focuses on all variables that affect total cost.”
An Ounce of Prevention/
A Pound of Cure
Rollins said companies must evaluate whether the insurance professional they’re dealing with is simply an insurance broker or a total-benefits adviser providing value-added services and cost-controlling strategies. He suggested selecting insurance professionals offering annual open enrollment programs, including informative benefits package presentations for employees, as well as quarterly claim reviews and strategy
“Claims should be reviewed quarterly looking for both frequency and severity,” he noted. “Typically, 80 percent of claims are tied back to 20 percent of the employees. Once identified, the broker should proactively manage those situations.” An effective insurance professional should also offer cost-controlling technology tools, such as a human resources portal to simplify administrative tasks, and a customized human resources Intranet.
Next, Rollins suggested partnering with an insurance professional who will provide a strategic wellness program, part of which should include a series of monthly wellness brochures and annual on-site health fairs. “Approximately 40 percent of all health-care costs stem from behavior that people can avoid,” he continued. “One way of holding down health insurance premiums is to persuade employees to follow healthy lifestyles. So, brochures on healthy living and bringing in experts to teach workers about health matters can help.”
A growing awareness of the positive side effects of prevention on profits was evident in the PIA/GATF surveys. “Printers are doing a number of things, such as paying for employees’ health clubs, nutrition programs, weight-loss and stop-smoking programs and health counseling as a way to help control health insurance costs,” noted Davis.
While picking up the tab for gyms and weight-loss programs may seem like mind-blowing additional expenses on top of existing increases, to ignore these measures could make business owners penny wise, yet pound foolish. The upshot is, in order to be healthy and wealthy, business owners must also be wise.