OF THE MANY DOOMSDAY SCENARIOS THAT THE MEDIA ASK THE PUBLIC TO
CONTEMPLATE EVERY DAY, ONLY A VERY FEW ARE TRULY AT CRISIS STAGE. SOME ARE OBVIOUSLY SO LIKE GAS PRICES. SOME ARE QUIETLY SO LIKE HEALTHCARE COSTS.

If employees are not reminded of healthcare cost increases as regularly as they are gas price increases, employers are. Most have no more pressing cost concern than health care.

Check the numbers. Between 2000 and 2006, the median earnings of Missouri workers rose 18.9 percent. Annual health insurance premiums for those same workers in that same period rose 61.4 percent. And the Missouri experience is normative.

More troubling is that these costs have steadily increased despite a thinning of coverage to insured families. These
increased costs have also helped prod other would-be consumers onto the illcounted rolls of the uninsured, 700,000 in Missouri alone, roughly 14 percent of the non-elderly population. The uninsured costs, in turn, are absorbed in the
premiums of those who do have health coverage.

Rick Kahle, president of the Kansas City Employee Benefit Division for the Lockton Companies, the world’s largest
privately held insurance broker, sees some sliver of a silver lining in that the rate of increase locally has declined from
about 14 percent a year five years ago to about 6 percent this past year, but that is still higher than the growth of revenue
or the growth in most other business costs.

Kahle says that most employees want to be generous, but they have had to either bump a greater share of insurance
costs to their employees, reduce their coverage, or do both. “When you combine additional co-pays with higher deductibles,” says Kahle, “people feel like they are going backwards.”

Big Company, New Approachesr

Different companies of different sizes have different strategies for dealing with cost pressures. Melissa Wood, associate vice president of human resources for Burns & McDonnell, believes that all successful strategies begin with employee education, both on coverage options and on wellness issues.

The engineering, architecture and consulting firm has some 2,700 employees nationwide, most of those in Kansas City.
Arguably, the company has a built-in advantage over others of its size. It is employee-owned. While most companies struggle to impart a feeling of “ownership” to their employees, at Burns &McDonnell that feeling is instinctive. “Employee ownership does make a difference,” says Wood.

Several years ago, the company put in to place a consumer-driven option with a lower premium and flexible spending plans that gave participating employees more ownership still. Wood believes that this option is partly responsible for the fact that both utilization rates and cost increases have stayed consistently below the national norm at Burns & McDonnell.

Like many large companies, Burns &McDonnell has instituted a rigorous wellness program and worked hard to educate
the work force on its value. As to a perceived improvement in employee health, Wood concedes, “It will take some time.”

That said, Wood is genuinely optimistic about the program’s prospects. “What I have seen is a greater interest in healthy living,” says Wood. “More people are participating than I would have predicted.”

Size Does Matter

Small companies face altogether different challenges and usually more daunting ones. No one knows this better than
Shelly Schierman, president of the Louisburg Cider Mill in Miami County, Kan., about a half-hour south of Overland Park.

The one plan that the company has been able to afford for its half-dozen or so covered employees has a $2,500 deductible per person, which rolls back to zero every quarter. Schierman describes the plan as “virtually catastrophic.”

Other than the provision of catastrophic care, the plan does have two humble virtues. One is that employees have an actual health care insurance card. They may end up paying most or all of the bill when they go for care, but the card
assures them routine access. The second advantage is that the bills they do pay come with a small provider write-off.

In the silver lining department, Schierman readily admits that high ded-uctibles have helped make her and her employees “absolutely” more prudent in their utilization of the healthcare system and more responsible about their own health.

She has entertained the idea of employing Medical Savings Accounts, but for a small business owner with much else to do, she found their introduction too complicated to justify.

Although Schierman is not exactly sure why, and hesitates to ask, her premium costs have been constant, even
declining, over the last several years.

Jonathan Cohn, president and CEO of the Yarco Companies, takes his responsibility to his employees seriously. A few years ago, in fact, Yarco was honored to receive the Kansas City Business Ethics Award, awarded by the Society of
Financial Service professionals.

Cohn is a serious student of the healthcare industry. With some 550 employees in his real estate management company, he almost has to be. As an overall strategy, Cohn believes in partnering with the best in the business.This includes not only in-house support, but also the broker and the group that provides coverage.

“This is a battle that everyone is fighting,” observes Cohn, “but it cannot be fought without good advice.”

From there, Cohn’s strategy grows progressively more specific. As a first step, he believes it essential to share
information with employees about the healthcare environment that they and he collectively face. As a second step, he
thinks it necessary to make employees aware of their health coverage choices and the consequences of those choices.

And as third step, employees are asked to assume some responsibility for their lifestyle choices. Cohn encourages
them by providing a wide range of wellness and smoke cessation programs, but like any employer, he can only do so much. Employees have minds of their own. Some choose to embrace a wellness culture. Some don’t.

As all employers understand, the collective culture of the healthcare environment tends to discourage individual
incentive.

Consumers pay for gas out of their own pockets, but they pool resources to pay for heathcare, and this inevitably dilutes employee responsibility. Still, Yarco seeks all the good counsel he can find, because he and most of his employees know the good fight has to be fought.

So does Melissa Wood. She nicely summarizes the imperative for creative resistance to the spiraling price of healthcare. “If you just accept the fact that your costs are rising,” says Wood, “they will continue to rise.”