BLOOMINGTON - Dick Eikenberg doesn't have a crystal ball on the future of your health-care costs. The small-business owner and vice president of the Employers' Coalition for Healthcare Inc. in McLean County has some visions of a more radical future, though.
"The (health benefits) model is nearly broken," Eikenberg said last week in the downtown Bloomington headquarters of his two businesses - Flatlander Industries and Business Builders.
Unless substantial changes are made, Eikenberg guessed within three to five years
w Some employers will drop health insurance coverage and could give employees money to shop for their own insurance.
"You'll see a substantial number of businesses saying to employees, 'Here's $3,000 or $4,000; see what you can do.' What they may end up with is high deductible insurance" such as a $2,000 deductible for family coverage.
w Business may charge higher premiums to employees who use tobacco or engage in other unhealthy behavior that could eventually lead to major health problems and costly treatment.
"The employer who can hire healthy, nonsmokers will be better off in the long term," he said.
w Businesses may make employees attend wellness programs dealing with nutrition, exercise and weight control.
Health insurance is among the largest costs for businesses and they want to get control of these costs as much as their employees, said Eikenberg.
"I think there will be a fight for healthy employees," he said. "The people who are the best, can beat the competition, will succeed in the brave new world out there.
Remember, we're competing against countries where workers are happy to have jobs and there is no such thing as pensions, workers' comp and unemployment benefits.
"In order for businesses to survive, they need to reduce costs, to be more proactive. You do that with smarter, healthier people."
The future is not clear
Health benefit costs continue to rise and there's no easy solution, let alone predicting how costs will trend in the next few years, said local experts.
Two other Central Illinois businessmen who focus on health benefits see a less extreme future.
Todd Hutchison, director of underwriting and medical economics at Health Alliance Medical Plans, said several employers are looking at different benefit designs for employees who participate in health screenings, while providing accommodations for employees who can't participate in specific wellness programs.
Urbana-based Health Alliance has 255,000 members, including more than 29,000 in McLean County.
Employers probably will provide incentives to employees who participate in smoking cessation programs and health risk assessments, he said.
"It's still uncommon but more and more employers who see their costs going up are starting to ask those questions," he said.
Rather than mandating participation, "we prefer the incentive side, encouraging medical disease management, annual physicals, mammograms, colonoscopy, smoking cessation and wellness programs," Hutchison said.
State Farm Insurance Cos., McLean County's largest employer, also prefers encouraging employee participation rather than mandating it, said benefits manager Tom Jecklin.
State Farm remains committed to provide health insurance for employees.
"It attracts and retains employees," Jecklin said. "So having a competitive health-care program is extremely important for employers of our size and we're committed to maintaining it."
But plan design changes are inevitable.
For example, State Farm's switch this year to Blue Cross and Blue Shield of Illinois as claims administrator and using its network of providers has helped to control costs, Jecklin said.
This year, State Farm began offering a new consumer-driven health plan with deductibles of $2,500 for a single employee and $5,000 for an employee with family coverage. But State Farm also funds a health reimbursement account to help employees offset the high deductibles.
The concept is to keep premiums down by having employees pay more out of pocket, while providing coverage for major health events.
Already, 18 percent of State Farm's 12,780 McLean County employees have chosen the plan, which Jecklin finds encouraging.
State Farm also introduced a new voluntary disease management program and continues to provide smoking cessation and other disease prevention programs.
"A key to controlling health care costs is having employees more engaged in that (health care) process," Jecklin said. "We need to provide them with access so they are better consumers."
Predicting the future of health benefit premiums more than a year or so down the road is almost impossible because those costs are determined by everything from the health of employees in a particular group, to changes in benefit design, to federal and state legislation.
"We believe that our cost trends will be in the upper single digits - 8 to 9 percent - as opposed to the low teens of a few years ago," Jecklin said.
Hutchison said premium increases will average 8 to 9 percent this year but emphasized increases vary depending on the plan design. Premium increases would have averaged about 11.6 percent this year but many businesses increased co-pays for office visits and for prescriptions or to increase deductibles.
Health Alliance rates average $275 a month or $3,300 a year for employees with single coverage, and $900 a month or $10,800 a year for employees with family coverage, Hutchison said.
How that is divided between the employer and employee varies with each business, he said.
For State Farm's two most popular plans - a PPO with a $1,000 deductible and an HMO - employees experienced premium increases of about 3.5 percent, Jecklin said.
A Health Maintenance Organization uses primary care physicians to coordinate patient care, generally limits patients to doctors in the HMO network, and calls for prior approval before getting additional care. A Preferred Provider Organization allows patients to use doctors outside the network but patients generally pay more for doing so.
Employees with single HMO coverage average paying $105 a month and employees with family HMO coverage average paying $303 a month, Jecklin said. That's about 29 percent of the cost, with State Farm picking up the rest.
For the PPO with the $1,000 deductible, singles pay $68 a month while families pay $198 a month. That's 25 percent of the cost, with State Farm picking up the rest.
The Employers' Coalition is a group of 325 businesses, representing 4,400 covered lives, that have joined to provide affordable health care to small- and medium-size businesses.
Coalition members are experiencing rate increases ranging from 7.5 percent to 9.5 percent this year, depending on their experience, Eikenberg said.
Eikenberg said Flatlander and Business Builders - through the coalition - averaged $270 a month for employees with single coverage and $750 a month for employees with family coverage.
"I think we were 2 to 3 percent under the county average" for small businesses, he said.
Eikenberg said everyone is responsible for rising health insurance costs: from drug companies that spend millions of dollars on advertising, to hospitals wanting the latest high-tech equipment, to doctors that practice "defensive medicine" by ordering tests that may not be necessary because of fear of malpractice accusations, to government preventing other coalitions from organizing, to patients who don't exercise, eat healthy or get their yearly physical and screenings but then need expensive tests and procedures when they get sick.
President Bush's proposal last week of health savings accounts may help extend the current health benefits model, Eikenberg said.
"But the bottom line is that everybody needs to address this subject and determine what we can do together and not what we can do apart."