Grand Haven Tribune (MI)

Rising costs pinch companies, self-employed

Wed, Jan 16, 2008
BY KYLE MORONEY
kmoroney@grandhaventribune.com

Editor's Note: This is the third of a series of stories on the impact of health care and the insurance industry in Northwest Ottawa County.

The pinch of increasing health insurance rates is felt by businesses all over the country. But for some companies, like Grand Haven-based JSJ Corp., the pinch is easier to maintain.

"We've seen the average increases that typical companies see, but I think we've been able to manage them better so that at the end of the day the actual net cost to the company and employee has been less than the initial (cost)," said JSJ Organization Development Manager Kim Bremer.

JSJ, with offices and umbrella companies in Grand Haven and Spring Lake, uses a self-funded insurance program where the company actually pays the health care expense back, Bremer said.

"So if an employee goes to the doctor, they still have their insurance card from the carrier. They don't see any difference," she said. "The difference is that the bill, at the end of the day, ends up here (at JSJ) and we pay it directly. So if our employees go to the doctor less over the next year, our costs will be lower in that year."

While Bremer would not release cost details for the company or for its employees, she said the company's benefit costs are determined by the "mid-point of the local market," which is re-evaluated each year, and the cost share has remained the same for both the employees and the company.

"We have not changed that in recent years, as far as expecting employees to pay a larger share, because we're all paying a greater share if the total goes up," she said. "The employer bears the largest percentage of it and the employee bears a smaller percentage — but it goes up for both.

"We don't want health insurance to be a deciding factor for an employee to work for JSJ or not," Bremer added, explaining that employees have the option of choosing a higher deductible with lower premium costs or lower deductibles and high premiums.

In an effort to keep rising health care costs at a minimum, and help employees live healthier lives, JSJ developed a wellness program in 2005.

In order to participate in the optional wellness program, JSJ employees complete a health risk assessment, as well as make an effort to keep up with preventative health maintenance — such as undergoing an annual physical exam through their doctor — according to JSJ Benefits Manager Amy Rollston.

Another component of the program is employees may pick a health program specifically designed for what they want to accomplish — like quit smoking, lose weight or eat healthier.

"It's self-motivated," Rollston said.

"If people are healthier, they're more productive, and that goes way beyond missing time just because you're sick," Bremer said. "We believe that in the long term, people who take these options are going to be healthier. And if you're healthier, then you have lower health care costs."

The city of Grand Haven is implementing a similar program this year for its hundreds of employees and retirees.

JSJ employees craving the typical high-calorie and high-sugar snacks generally found in vending machines will find a healthier way to satisfy their sweet tooth.

"We took out our vending machines that have Snickers bars and everything else, and we took them out of the building," Bremer said. "We also have healthy drink options, too."

She said employees have not complained about the healthier vending machine snacks.

"It helps people eat healthier while they're here," Bremer said. "And if we introduce somebody to something that they've never tried before and they realize, 'Hey, this healthy stuff is pretty tasty,' then they may go home and start buying these things themselves and have them in their home."

The company has even replaced fattening goodies during conference meetings with snack baskets made with low-calorie, low-fat and high-protein snacks, Bremer said.

Health insurance for the self-employed

After years of being an employee, Grand Haven Township resident Mike Johnson decided to become self-employed two years ago. With that decision also came the decision of what to do about health insurance for his family.

Johnson, 38, and owner of Wright Design, set up a Health Savings Account with Golden Rule Insurance, an insurance provider for small businesses and the self-employed. Johnson pays a regular premium each month, which just increased to $360, but then sets a deductible to "whatever you want," he said.

After he pays the deductible for that year, which Johnson set at $2,400, then everything else is covered 100 percent for that year.

"You put money into an account, like a bank account, and it accumulates the money you use for the deductible," Johnson said, adding that it is cheaper than what he was previously paying for health insurance at his former jobs. "It's really not too bad."

Johnson said Golden Rule is currently the lowest-costing provider for the self-employed person.

"Being that it's cheaper, I wish I had done it before," he said. "... It's a huge chunk of what you make in a year — $6,000 a year just goes to insurance."

Smaller companies deal with health insurance hikes

Rycenga Building Center, 1053 Jackson St., has an HMO plan — a plan commonly used by businesses — with Michigan-based Priority Health.

Three years ago, the company had a standard health insurance plan with co-pays, but no deductibles — according to an employee of the building center who would only identify himself as Jim. But when the insurance rate for the company started to climb, so did the payments for the employees.

Now, employees at Rycenga Building Center pay a $3,000 deductible, which had increased from $2,000 on Jan. 1.

"More responsibility is being pushed onto employees. It's the way health insurance seems to be going," Jim said. "What choice do you have?"

Although insurance rates are on a constant increase, which Jim doesn't see reversing in the near future, insurance coverage has not suffered.

"We opted not to do that," he said. "We opted to take a higher deductible — if you don't use it, you don't pay."

But insurance hikes has more employees rethinking trips to the doctor for minor illnesses, Jim said.

"Raising deductible rates are causing more employees to be more involved in (their) health care," he said, explaining that people are often opting-out of nonessential surgeries to save money. "Employees are making more choices for their own health care. ... They're taking a closer look at the necessity of services and costs."

Brian Holman, a benefit consultant at the Oakes Agency in Grand Haven, said that theory is becoming more common among employees and employers.

"People are becoming smarter consumers," he said, explaining that people are not going to abuse health insurance companies by going to the doctor every time they or their child gets the sniffles.

Holman has seen first-hand how rising insurance costs are impacting local businesses.

"I've lost three companies this year that have closed their doors because they can't afford their No. 1 expenditure — health insurance," he said.

Ten years ago, Holman explained, a family might have had to pay very little or nothing for health insurance; and now they might be paying half a family rate at $400 or $500 a month.

"More and more is being shifted to the employees," he said. "The dollar amount that people are spending out of their own pockets has increased significantly."

Holman doesn't see the trend in health insurance rates changing in the near future. "The number one reason is because people are living longer," he said. "They're using more health insurance so the rates are going up."

Holman suggests people shop around for health insurance, just like they would for home and auto insurance.

"People's needs constantly change," he said. "... If people looked at what they really, really need versus what they really, really want (in health insurance) — they'd be saving themselves a lot of money."