Prognosis: Negative

Rising health-care premiums have companies shifting costs, pushing "wellness," and punishing unhealthy behavior.

Those who comply with the recommendations that come out of that process — joining a weight-loss program, for example — will receive a $750 contribution. Those who answer the questions but refuse to change their now- documented bad habits will receive just a $250 subsidy. (Those whose habits are already demonstrably healthy would get the full $750.)

A Nudge Too Far?
In addition to obliging employees to participate in wellness programs, many finance chiefs are examining their plans in painstaking detail in an effort to wring out costs. Douglas Machine CFO Tom Wosepka says that he spent “a lot of time” studying the company’s plan, and the company was able to keep medical-cost increases for its 550 employees to just 5 percent this year. One change: employees who undergo gastric-bypass surgery will no longer have that cost, which usually runs between $20,000 and $25,000, covered by their medical insurance. Working with an outside health-care consultant, Wosepka concluded that the stomach-shrinking procedure often causes complications and rarely produces long-lasting benefits.

Perhaps the most surprising finding to emerge from Wosepka’s ongoing analysis with the health-care consultant was that spouses, not children, tend to be the most expensive family members to insure. As a result, the company changed the structure of its health-insurance offerings so that any employee who wants a spouse covered must opt for the family plan, which carries a higher premium than the company’s former “single-plus-one” category. For the most part, however, Wosepka says Douglas would rather give its employees a nudge than a shove, which is why the company offers incentives for exercising, smoking cessation, and flu shots. “We’d rather use the carrot to help people be good health consumers and make healthy choices,” he says.

Some CFOs contend that certain measures that tie the cost of premiums to employees’ lifestyle choices spread a dark tarp of suspicion and mistrust over the company. “That would be very inconsistent with our values,” says Ken Rader, finance chief at adhesives maker Bostik. “It would create a lot of negative impressions. When you start doing that, you erode the bond of trust between employer and employee.”

SAP America’s White thinks such an approach can send a counterproductive message: “We hire the best and the brightest professionals and we expect them to excel,” he explains. “We treat our people according to our values.”

Restraint Ordered

Lest employees feel that any and all health-care savings will come at their expense, it’s worth noting that finance executives are scrutinizing every other link in the health-care chain as well. Some are searching for savings by reining in coverage (see “Minor Cuts” at the end of this article). Others are aggressively monitoring their vendors and conducting audits to see whether insurers are administering their plans appropriately. About 10 percent of every premium consists of administrative costs — all the support services involved in paying out claims — which employers can try to control by signing multiple-year deals with their carriers.

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