When it comes to its workers’ health, Lifespan doesn’t skimp: $80 million last year, or almost four weeks’ worth of revenues. In fact, health benefits rank third or fourth among the hospital network’s top expenses, says Brandon Melton, senior vice president for human resources.
But knowing how fast those costs have risen – and continue to rise – Lifespan has also gotten proactive. In 2003, it went self-insured, and working with a consultant, it’s pulled together all claims data to identify the most common diagnoses and biggest cost drivers.
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It adopted a mail-order prescription program that, within nine months, half the workers were using. And most important, says Melton, Lifespan invested in making employees healthier with a “very robust” wellness program that includes four full-time staffers, a network of “health promotion” teams, two gyms and a “work-life balance” initiative.
The payoff: A trend of double-digit annual cost increases has slowed to 5 percent for this year, and 3 percent for 2006 – one-third of what Blue Cross & Blue Shield of Rhode Island and UnitedHealthcare of New England quoted him. Yet if Lifespan slacks off, he said, “we know we’ll fall back into double-digit increases.”
This is the picture that Melton, colleagues at Bryant University and Taco Inc., and state Health Insurance Commissioner Christopher F. Koller painted at a discussion on health benefits on Sept. 22: a national trend of skyrocketing costs, and employers trying all kinds of tactics – some more successfully than others – to keep health care within reach.
“Something’s got to change, because soon the cost of health insurance is going to be almost the same as the cost of wages,” Koller said.
The event, held at the Federal Reserve restaurant, was part of PBN’s yearlong Economic Agenda initiative, geared to producing a blueprint for economic growth in Rhode Island. (The next event, on Oct. 20, will focus on transportation issues.)
Along with Melton, who oversees a health plan covering 24,000 people, employers were represented by Kyle Adamonis, senior vice president for human resources at Taco, and Linda Lulli, associate vice president for human resources at Bryant, each of whom oversees health benefits for 500 to 600 workers and their dependents.
And while Taco and Bryant both qualify, by most standards, as large groups, the experiences that Adamonis and Lulli described contrasted sharply with Melton’s in terms of the power they wield over their health plans. Neither is self-insured, for example; Taco has only gone part of the way by self-insuring for the first $2,000 of workers’ annual costs.
As a large group, Taco is experience-rated, Adamonis said, but the company is still small enough that “five or six claims can affect our premiums drastically.” And even on good years, she said, “we’ve still had double-digit increases.”
All three employers have invested in workplace wellness initiatives, but while Melton and Lulli spoke enthusiastically of the impact – Lulli noted that Bryant’s rate hike for next year will be 8 percent, after several years of double-digit hikes – Adamonis said Taco, which has earned a Silver Award from the Worksite Wellness Council, has yet to see a payoff.
Koller said wellness is the “Holy Grail for people who look at these things. The best way to save costs is to stay healthy.” There may not be “empirical data” to show the programs always save on medical costs, he said, but they improve labor relations and worker attitudes.
Adamonis noted that at Taco, only about 20 percent of workers participate in wellness programs, and they tend to be the healthier people, not those who need them most. Koller said that’s a common problem, because medicine has made it too easy to combat health problems without making the effort of diet and exercise.
Asked how they encourage workers to get involved, Melton said Lifespan has found time is the biggest factor, so the company has tried to make programs accessible during and around work hours, so people don’t have to sacrifice their personal time.
But monetary incentives are also under consideration, Melton said, such as making health insurance less expensive for people who take care of themselves.
“The alternative is death and disease – I don’t know how much more incentive you need,” Melton said. “But apparently you do.”
Asked about other cost-saving tactics now being promoted by the health insurance industry, such as offering high-deductible health plans in conjunction with health savings accounts, all three employers said they don’t believe their workers are ready for HSAs.
“We’re not at a point where employees have taken an ownership mentality about their health care,” said Melton. Lulli said Bryant workers aren’t “educated enough” about health issues; Adamonis said Taco has considered the new plans, but “I think the jury’s still out on HSAs.”
