"We're looking at ways to reduce overall costs through plan design or educating our team members on making more cost-effective decisions

Healthcare is another one of those "basic human rights" that we simply haven't yet gotten around to fully recognizing or embracing. For the richest nation on earth to have even one uninsured person languishing on the street while suffering from an illness or injury is a travesty of our moral and ethical obligation to our fellow humans. Health costs to see hefty jump Many employers to pass increases on to workers By GETAHN WARD • Staff Writer • August 31, 2008

For three years, employees with Nashville-based Southwestern/Great American Inc. haven't seen an increase in what they pay toward the cost of health insurance.

With the company's medical costs up 3 percent this year, though, and its medical claims processor seeking a 7 percent fee increase, that's likely to change next year.

Southwestern isn't alone. Nashville-area employers negotiating benefits with health insurers for next year are seeing medical costs in their health plans rise 8 percent to 12 percent, local insurance brokers said.

That's a smaller increase than the 14 percent average of five years ago. But with companies facing challenges from a U.S. economic downturn, they're under more pressure to rein in expenses, prompting some companies to pass on more of the costs to their employees, change the mix of insurance offerings or give employees incentives to live healthier lifestyles.

"With medical costs going up, we need to go up a little bit just to make sure we're staying ahead of the curve," said Rick Harris, vice president of human resources at Southwestern.

Some employers opt for high-deductible health plans, coupled with a health savings account, in which the employer and the employee contribute to an account and employees can take the money with them when they leave. Another option is known as a health reimbursement arrangement, or an HRA, in which only an employer makes contributions, and employees cannot take the money with them when they leave.

This month, Cavalry Transportation LLC began requiring employees to pay an average of 31 percent of their insurance costs, depending on their marital status and number of dependents.

Previously, Cavalry had covered 100 percent of premiums for most employees, said Tina Sterner, human resources manager with the Nashville-based third-party logistics company. "It's just due to the economy and the rising costs of insurance."

Other companies are weighing their options.

O'Charley's Inc., a Nashville-based restaurant operator, expects medical costs associated with its self-insured benefits program to rise as much as 13 percent this year. Only 20 percent of O'Charley's employees participate in its medical plan, but executives hope to keep costs down in a year in which the company saw increases in the federal minimum wage. Also, more states are mandating certain levels of health coverage.

"We're looking at ways to reduce overall costs through plan design or educating our team members on making more cost-effective decisions, such as trying to get their physicians to prescribe generic drugs rather than brand drugs," said Ron Liggett, director of corporate compensation and benefits with O'Charley's.

About 60 percent of employers have a Jan. 1 start date to their new benefits year. Many employers with more than 1,000 employees decide what they plan to offer by Labor Day weekend and ask employees to sign up from mid-October to mid-November. The start dates for smaller employers vary.

Affordability is priority

At online grocer Plumgood Food, a new health package starts Monday, and it comes with a higher-priced health insurance premium. Plumgood employees will pay 1.5 percent more while their employer picks up a larger piece of the 5 percent overall increase.

"We picked a plan that our employees could afford — $22.94 per two-week pay period," said Plumgood Chief Executive Eric Satz, referring to the health savings account option offered by BlueCross BlueShield.

Elsewhere, Franklin-based carmaker Nissan North America has started an initiative called "LiveWell — Your health. Your Life." The company is shifting its focus from making sure that sick employees receive the best available care to prevention and wellness.

"Employers recognize that there's a direct relationship between people's health status and their demand for health-care services, and if they can improve their employees' health status that would lessen their demand for health-care services," said Robert Levy, president of local employee benefits consultant Paradigm Group.

Through the end of the year, Nissan is offering its 15,000 employees health risk assessments to determine their wellness and health needs. Employees will be offered weight management, tobacco assessment or disease management programs as part of the plan.

The company also is ditching its preferred-provider organization plan for a high-deductible health plan with a health savings account plus a health reimbursement account. It will eliminate employee co-pays for preventive care, such as medical checkups, mammograms and immunizations.

"If you've got healthier employees, it's a win-win," said Marlin Chapman, director of benefits compensation and human resources analytics with Nissan. Nissan and other employers also are continuing to open clinics at their work sites.

Preventive care pushed

Auto parts maker Calsonic Kansei North America Inc., for instance, plans to open clinics at its locations in Shelbyville and Lewisburg, Tenn. The goal is to encourage employees who don't routinely see a doctor to receive preventive care.

"Right now, we're going through a lot of downturn in the auto industry," said Robert Masteller, vice president of human resources at Calsonic Kansei.

"We want to do something positive for employees from a morale standpoint."

More employers also are turning to high-deductible health plans with health savings accounts to reduce premium costs. Nissan is among a minority of employers to abandon traditional plans altogether.

"It's a radical change in the way things have been done for years, so if you give a choice you're going to have a majority of people who will go the traditional route," said William "Willo" Taylor of First Horizon Insurance Group.

Sara Taylor, annual enrollment leader at human resources consulting firm Hewitt Associates, said that to reduce costs companies also are raising co-pays that employees pay on their medicines or dealing with fewer health plans to get better rates. More employers also are expressing interest in offering voluntary benefits such as long-term care, critical illness or pet insurance, but most often employees pick up 100 percent of the premium cost for such extras.

Not all employers have seen insurance costs go up. By switching insurance carriers, Uniguest of Tennessee Inc. estimates it and its employees will save 30 percent on benefits, money that company executives said will go to provide employees a retirement plan.

Uniguest left its carrier of three years, BlueCross BlueShield of Tennessee, and switched to UnitedHealthcare, starting Oct. 1.

"Thirty percent for a company our size is a big savings," said Shawn Thomas, chief executive of the provider of security software and call-center support for the hotel industry.

Getahn Ward covers the business of health care. He can be reached at 615-726-5968 or at gward@tennessean.com.