LETTERS
Health Insurance
More than any time in recent memory, today’s California employers need to be both creative and strategic in considering how to provide health insurance benefits to their workforce. For the next three to four years, there will be no other inflationary area of business that will affect an employer’s bottom line as dramatically as the predicted 15%-20% annual growth in health insurance premiums.
These increases, coupled with the overall economic downturn, are forcing some agonizing decisions on employers. Among them is the fundamental question of whether or not to provide health insurance coverage at all to their employees. A potential decrease in the number of California employers who will be providing health insurance is an alarming reality for a state that already lags behind the national average and sees 40% of its employers failing to offer any health insurance at all.
Fortunately, these bleak indicators need not be a death knell for those employers who wish to continue sponsoring group health insurance. For them, the key lies in accepting the realities of the day and with them the need for budget discipline.
For some employers, this strategy may dictate offering a modest or “no frills” benefit program. Employees will understand this so long as you also provide them options to go beyond the basic program offered. By switching from a traditional “defined benefit” program to one of “defined contribution” employers can do just that. The defined contribution model has been talked about for years. But now its popularity is proliferating rapidly. Under this design, employers move away from selecting a single health plan for all of their employees and instead select the financial contribution level they wish to make.
By marrying this design with a health purchasing alliance, employees are then free to select from competing health plans and use their employer’s contribution as a “voucher” from which they can “buy up” or “buy down” to the plan and benefit level that works best for them. In an era when employers are seeking fiscal responsibility and employees are seeking empowerment in their healthcare decisions, this approach is making a lot of sense to a growing number of companies.
Brokers can help employers set a budget, find the right benefits option and provide suggestions on how to control skyrocketing premiums. And keep two other things in mind: flexibility and simplicity.
Rising healthcare premiums are being driven by rising hospital, physician and pharmaceutical costs. It is affecting all health plans so switching from one to another for the sole sake of cost is not the answer. Each time an employer switches plans it causes disruption and potentially adds cost, especially if it causes employees to find all new doctors. That’s why it’s important to choose a program that provides enough flexibility that from year to year it will be adaptable to changes that may occur in an employer’s workforce.
As for simplicity, even if you choose a purchasing alliance offering six or more health plans, you should still expect to receive a single itemized invoice, a single enrollment form and a single point of contact. Make sure that any health plan or program you choose is one that is free of hassle, headache and cumbersome administration.
John M. Word III
Managing Partner
CaliforniaChoice
Orange
Bob Martini
One of the really terrific aspects of serving as Chapman University’s president is the opportunity to become friends with some of the most effective leaders and nicest people one can ever have the good fortune to meet.
That is why I was so pleased to see that one of my heroes and role models, Bob Martini, was selected as OC Businessperson of the Year. I make it a practice to break bread with Bob on a regular basis. Not only do we have a lot of fun together, but I feel very fortunate to have the opportunity to learn from a true master.
Here is a guy who was asked to come out of retirement basically to save a venerable business that traces its roots back to 1888. The fact that he succeeded is the stuff upon which legends are born.
I asked Bob recently what skill was most important in orchestrating his company’s turnaround. I found it interesting and illuminating that he didn’t say it was marketing, financial or management skills that were critical. Quite simply, he said it was mostly about communications,communicating with the troops, shareholders, suppliers, customers and lenders.
In this day and age, when a new management craze comes along and hits the best-seller lists on a regular basis, it’s refreshing to hear a truly great leader eschew the fads and return to the basics.
James L. Doti
President
Chapman University
Orange
