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Employers feel the pain as health care costs rise

Experts advise business owners to shop around to get better rates

Brian Pedtke, owner of two Servpro franchises, is concerned about the 20 percent cost increase Anthem is passing onto his company. Staff photo by Ty Greenlees

Ty Greenlees/Staff Photographer Brian Pedtke, owner of two Servpro franchises, is concerned about the 20 percent cost increase Anthem is passing onto his company. Staff photo by Ty Greenlees

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By Ben Sutherly, Staff Writer Updated 1:14 AM Sunday, November 8, 2009

Ouch.

It’s been a common reaction among local employers in recent weeks as the cost of providing health insurance to their employees in 2010 becomes clearer.

Brian Pedtke, whose two Servpro franchises provide clean-up services in Preble County and northwestern Montgomery County, said his Clayton-based business is facing a 20 percent hike in health-insurance costs for his 14 employees. “It is getting to the point where we are having to drop coverage and increase deductibles just to afford the insurance itself,” Pedtke said, whose employees already pay 50 percent of premiums.

Meanwhile, JatroDiesel, a biodiesel manufacturer based in Miamisburg, is facing a 23 percent increase in health care costs for its seven employees.

“We did feel trapped,” said Diana Barber, who administers JatroDiesel’s health plan.

Among 1,500 Dayton-area employers with 270,000 employees, the average proposed increase in health-insurance costs for 2010 is 17.4 percent, according to McGohan Brabender, a Kettering-based employee benefits broker and consultant.

After negotiations, the actual increase was 6.9 percent for those companies, said Scott McGohan, a firm partner. That’s down slightly from the 7.6 percent actual hike a year ago.

Many health insurance providers have lost 5 percent to 8 percent of their membership in the Dayton market, far more than in the past, McGohan said. That’s mostly the result of layoffs and, to a lesser extent, of companies doing away with health insurance.

For health insurance providers, “maintaining membership is really important,” McGohan said.

Employers or their representatives can use that to their advantage when negotiating health care costs. But, he cautioned, if workers as a group are considered high-risk or highly utilize their employer’s health plan, the insurance companies’ capacity to lower those rates diminishes.

Statewide, health-insurance companies are hiking their rates 10 percent to 15 percent, according to the Ohio Department of Insurance.

WellPoint, Anthem’s parent, claims the higher cost of health care premiums stems from advances in medical technology and subsequent increases in utilization, price inflation for medical services, the high cost of regulatory compliance, and patient lifestyles.

“We are seeing an uptick in utilization this year over last year,” due in part to uncertainty among some employees about whether they’ll lose their job and health coverage along with it, said Tim Schmalz, regional vice president of sales for Anthem. “With utilization comes an increase in cost.”

While Pedtke’s Servpro franchises didn’t negotiate costs last year, they’ll do so this year.

“We don’t know if they’re going to budge or not,” he said.

Contact this reporter at (937) 225-7457 or bsutherly@DaytonDailyNews.com.

Tips for trimming health care costs

Scott McGohan of McGohan Brabender offers these thoughts on trying to contain your company’s health care costs:

Be relentless about shopping the market.

Benchmark your business with other companies in your industry and of similar size. Are you within the norm?

Be realistic. Insurance is expensive.

Target wellness strategies on health care issues that are driving above-average utilization or overutilization of your health care plan.

Communicate with employees about health care costs and address perceptions of the company’s share of the cost versus employees’ share.

Frame that conversation as a matter of health care costs, not insurance costs.

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Jim,
States force people to pay for coverage they do not need or want, there are mandates for acupuncture, In-Vitro Fertilization, Morbid Obesity Treatment, Alcoholism/Substance Abuse, Hair Prosthesis, Well Child Car, Pastoral counseling, and birthmark removal are just a few. Opening the state boarders will allow people to purchase the coverage they want and will not force them to pay for the stuff they don't need.

James
11:26 AM, 11/9/2009

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Lets open a gambling house and tax it to help pay for these cost.
May we should have slots in the waiting room.

dice
11:13 PM, 11/8/2009

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James,
Lack of regulation is the problem. Right now the insurance companies don't have to adhere to anti-trust laws, which creates price fixing and regional monopolies. They deny coverage, drop coverage, raise premiums, raise out of pocket, etc, with little protection for consumers. We are getting taken to the cleaners by these corporate giants who lobby relentlessly to kill reform. Unbridled capitalism has turned into corporate thievery in health care and especially in banking.

Jim
11:11 PM, 11/8/2009

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Why do people think that government run health care will be cheap or efficient. Nothing the government does is, just look at medicate, and Medicare neither is doing well financially. In order to call the passed house bill "budget neutral" 10 years of taxes will be used to pay for 5-7 years of coverage. Competition on the other hand will help fix the health care problem, by letting companies compete across state lines coverage will be cheaper think car insurance which has less regulation.

James
10:28 PM, 11/8/2009

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Mel,
Reread the article several times so it sinks in. We have a health care crisis in this country, and at some point the government must intervene. If you aren't disgusted with what's been happening on Wall Street too, with the big banks and taxpayer funded bonuses, you're either an idiot, or you're totally misinformed. The Standard GOP line of, "less government", doesn't work, especially in this case.

Jim
7:55 PM, 11/8/2009

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