For businesses like Strauss Paper Company Inc. in Port Chester, when it comes to the battle to reduce health care costs, everybody loses.
The cost of health care premiums increased by a whopping 20 percent for Strauss Paper employees last year, a number that Stewart Strauss, the company”™s president and CEO, called “astronomical.”
Changing the company”™s plan to reduce those premiums, however, only accomplishes so much, he said.
“Last year our premiums went up 20 percent. We then changed the plan and they went up approximately 11 or 12 percent. But that change still costs everybody money” in the form of higher co-pays and deductibles, Strauss said.
With insurance companies offering fewer options, businesses like Strauss Paper Co. are constantly being forced to choose between a plan with higher premiums or higher out-of-pocket payments for their employees.
Strauss said his company ”“ which contributes to its employees”™ costs ”“ made every effort to accommodate all of the employees and took into account those aspects of the coverage plan that were most often needed last year before switching plans. Still, there is no perfect solution, he said.
“So we”™re making changes that take the (premium) cost lower ”¦ but we”™re getting less insurance for that, and at the end our staff is stuck paying the difference out of their pockets,” Strauss said.
His experience sums up one of the most widely acknowledged assertions in all of corporate America: health care costs too much.
That being the case, Westchester companies have often questioned why the government hasn”™t done more to rein in insurance premiums, which are increasing at alarming rates for most businesses that provide coverage for their employees.
For those businesses, annual rate increases of 10 percent or more have become the norm, forcing companies ”“ and their employees ”“ to grapple with increased premiums, deductibles and co-pays despite near-zero inflation over the past several years.
Up, up, up
Despite the well-documented challenges, health care experts surveyed by the Business Journal have said businesses and governments alike have few tools at their disposal with which they are able to drastically reduce the cost of health care coverage for employees.
“I haven”™t seen anyone come up with the silver bullet,” said Anthony Justic, partner at Maier, Markey and Justic L.L.P., a certified public accounting firm in White Plains.
While most businesses might be able to expect annual increases in the 10-to-13 percent range, Justic said he has seen and heard from several executives who are paying for 20, 25 and 30 percent health care cost increases.
“It”™s not just a local issue or a state issue but a national issue,” Justic said. “I don”™t see it changing in the near term and depending upon what side of the table you are on, it might not be changing in the intermediate term either. I think this is a system we”™re stuck with.”
At Michaels and Associates in Armonk, a full service employee benefit consulting and brokerage firm, principal Norman Michaels said the situation has reached a point where most clients are “relieved” when their health care costs increase “only 10 percent.”
One of the biggest problems for individuals and businesses is that the cost of medical care has gone up as a result of peoples”™ lifestyles, new state-mandated areas of coverage and new state and federal regulations.
“The big businesses are getting absolutely slammed because of some of the regulations,” he said, noting that uncertainty over the future of the Affordable Care Act is only adding to businesses”™ costs. “You can”™t plan anything because you don”™t know what”™s going to come out ”¦ Everybody”™s spending millions of dollars developing something that the Supreme Court can turn around and say is not legal.”
High costs
The Affordable Care Act, which will be reviewed by the Supreme Court in March with a decision expected by late June or early July, has been the subject of much contention since passing in 2010.
Regardless of whether individuals agree or disagree with the law”™s substance, Michaels said its effect was to increase the cost of health care across the board ”“ and especially in the Northeast.
“Not that we shouldn”™t have health care reform, and not that 32 million Americans shouldn”™t be insured, but the Affordable Care Act has cost us more money in the Northeast than in any other region of the country,” he said.
While insurance companies have been made out to be the enemy in the health care cost battle, both Michaels and Justic said insurers are likely only passing on costs that they are forced to pay for more expensive procedures.
“We have a system where the cost of health care is excessive and the insurance carriers are paying for that excessive cost, passing that cost down to the consumer market and then the consumers have to deal with that,” Justic said.
While several states ”“ including New York ”“ have made efforts to increase transparency by requiring providers to submit proposed premium increases for approval, the effect has often been for insurers to stop offering certain small group plans.
Pointers for businesses looking to save on health care included instituting health reimbursement accounts to help employees shoulder the cost of higher out-of-pocket costs, finding a plan where employees can pay for a portion of their health insurance costs on a pretax basis, and making sure that a company”™s plan doesn”™t have expensive offerings that are not being used.
The best bet may be to shop around between different carriers, Michaels said.
“It”™s very, very common today for employers to move their medical insurance from one carrier to another. Our suggestion is go out, look at all the facts, look at all the figures, and make the best decision for you.”
