Factors to Consider When Buying Organizational Health Care Insurance

Next to salaries, insurance is the largest employee-related expenditure a company will have. Besides the costs for coverage, other factors that play a significant role in these expenditures are plan administration, union and governmental requirements, changing employee needs for coverage, and company growth. Those in planning and decision-making capacities have to discuss these issues in depth before awarding the account to a health insurance provider.

Impact of Health Reform Legislation

• Every company will be required to comply with the new health care reform legislation signed into law by President Obama as the "Patient Protection and Affordable Care Act." Some companies fear an escalation in costs. Whether that happens, and to what degree, will unfold in the years ahead.

  If a company has more than 30 uninsured full-time employees they can be subject to a penalty of as much as $2,000 for every additional uninsured employee beyond 30.

  However, the legislation authorizes tax credits for businesses of every size. While some think that small businesses will be particularly hard hit, they will actually receive a 35% credit for every dollar spent on premium costs.

Employee Wellness Programs

• A healthy workforce has a dramatic impact on worker productivity, absenteeism, and medical-related costs for treatment and drugs. Organizations should realize the dramatic impact that preventive and wellness care can have on reducing costs.

  For example, The Center for Value Based Health Management worked with Pitney Bowes and their health care providers to conduct a study from 2002-2004. By incorporating a wellness education program, the firm experienced a decline of 38% in hospital admissions for employees with asthma, a 6% decrease in direct healthcare costs for workers with diabetes, and a 50% decrease in disability days for those with diabetes.

  In reviewing your insurance coverage strategy and reviewing companies for coverage, pay close attention to the benefits they provide in terms of examinations, shots, discounts for weight reduction, and incentives to reduce health-risk factors or stabilize conditions such as diabetes and hypertension.

Developing a Health Insurance Strategy

• It is important for large organizations to assign an internal task force specifically to develop the health insurance strategy. Members of this task force should have primary accountability for human resources, finance, operations, and union representation (if applicable). The team should develop a comprehensive overview of the company's past healthcare insurance providers, current status, costs and risk analysis for the past 3-5 years. It should also look at identifiable health care trends, employment and retirement projections, a demographic overview of the workforce, and identify high occurrences of medical conditions experienced by employees (cardiovascular treatments, diabetes, etc.).

  Based on fthese findings, the team can then prepare a final report with recommendations for executive approval and disseminate a Request for Proposals (RFP) to prospective insurance firms.