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Don't Wait for Health Care Cost Relief
















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There may be a tendency to wait for whatever health care initiatives emerge from Washington, D.C., and hope that the new initiatives are successful in containing your company's health care costs.

Don't.

Remember cable re-regulation? The government regulated cable television rates in response to complaints about rising cable costs -- only to find that, in many cases, those costs rose even further after the new regulations were imposed! The same thing could happen with health care.

Some steps that companies have taken to improve health care costs include:

  • Implementation of a managed care program to encourage employees to utilize various health maintenance organization (HMO) options
  • Cafeteria-style plans that allow employees to reduce the amount of coverage -- in return for reduced costs.

It's also important to monitor the various options that are being considered for health care. These options range from full comprehensive national coverage for all medical costs, to IRA-type set-asides for individuals to use for medical expenses. Each of these options has its own cost implications for your business, so get involved. Work with your trade association, or analyze the options yourself, and campaign to get the least cost option (or, if appropriate, no option) implemented.

Q. Our company has a unique approach to controlling sick days as well as medical expenses. After absenteeism hit our company hard for several years, we decided to pay our employees for the days they weren't sick. We allow 6 sick days a year. If an employee is sick for only 4 days, we compensate them for the 2 remaining days at the end of the year by adding 2 days' pay as a bonus. Not only has our productivity improved due to reduced absenteeism, but the medical expenses related to those sick days were also reduced. Seems that fewer doctor's appointments are needed when fewer doctor's excuses are required!

A. This is an interesting approach that can clearly pay off for companies with higher-than-average absentee rates. If your cost/benefit calculations show that this is worthwhile, and if your labor relations can withstand complaints from employees who may feel that this programs discriminates against legitimately sick employees, it could be a creative way to boost productivity and reduce costs. As always, benefits changes should be made in consultation with your lawyer.

Q. Our company has recently introduced a "wellness program" -- a program to keep our company employees well and thereby reduce medical costs. Do these programs work?

A. Wellness programs tend to be especially successful at companies that have "sick" employee populations; that is, companies where the incidence of heart attacks and other diseases linked to inactivity affect the employee population to a greater extent than the employee population at large. There are several aspects to a successful wellness program:

  • Access to physical fitness facilities and/or wellness programs such as dieting and smoking clinics
  • Rewards for participation in the wellness program (some overweight employees, for example, receive incentives for losing weight and keeping it off)
  • Creating of a corporate culture that emphasizes physical fitness and well-being.
A recently-created wellness program has had a measurable amount of success in keeping its employees from developing physical illness. This company had an employee population that was particularly "sick" even taking age and other factors into account. And ironically, the company developed and sold health insurance!