ELKHART -- R.C. Industries battled rising health-care costs by the luck and good fortune that none of its employees suffered a major illness.
Then one year, one worker got very sick and the company saw its insurance premiums rise 40 percent. Searching for a way to keep providing health insurance for its employees while controlling costs, R.C. Industries owner and president Chris Curtis introduced a consumer-driven health plan.
Consumer-driven or high-deductible health policies are an emerging trend on the health insurance market, a way for companies like R.C. Industries to shift more costs to their employees, thus giving workers an incentive to lead a healthy lifestyle. Workers need to access medical care less often and are more likely to ask questions of their doctors to make sure they get the most care for their dollar.
"You cannot just passively accept every decision you doctor hands you," Curtis said. "The reality of the market is you have to be involved and you have to be aware because (the costs are) just spiraling out of control."
In its 2007 Benefits Benchmark survey of businesses in the region, Gibson Insurance Group in South Bend found the percentage of regional employees offered a consumer-driven plan jumped from 8 percent in 2006 to 22 percent in 2007. Nationally in 2006, 14 percent of workers were offered this type of health insurance.
Typically employees resist these plans, in part because of the high deductible. Again according to the Gibson report, in 2006 workers in northern Indiana with consumer-driven plans were responsible for the first $1,500 in medical costs, including office visits and prescriptions, and in 2007 the responsibility climbed to $2,000. Across the country, the average deductible on a consumer-driven plan was $1,575 in 2006.
To provide workers a buffer against the increased out-of-pocket expenses, the consumer-driven plan is often combined with a health-care spending account that provides the employees with some resources to pay their deductible.
The plans, offered by most major heath-care carriers, are easing companies' costs, said Tim Leman, vice president of Gibson Insurance Group. Although the plans do not eliminate cost, they have proven in some instances to lessen or even stall the rising price of a company's insurance renewal.
Consumer-driven insurance products were developed as a preventive measure, Leman said.
"If employers can't afford this stuff anymore and the federal government steps in, maybe there'll be nothing left" for insurance companies to cover, he said. "They want to make it affordable for employers or maybe they'll be out of a job."
Healthy lifestyle
While the potential savings drew Curtis of R.C. Industries to offer a consumer-driven plan to his workers, he was especially attracted by the plan's emphasis on wellness. Employees enrolled in these types of coverage are given incentives to improve their health by stopping smoking, losing weight, exercising and undergoing preventive medical care like annual physical exams.
A high school and college athlete, Curtis started running after earning his degree and in 2004 began crossing the finish lines of well-known marathons. He extolls the benefits of exercise as more than making one fit -- also relieving stress, boosting self-esteem and improving intellectual abilities.
"We as humans weren't meant to sit all day," Curtis said. "That's not how God made us. When we sit all day, our bodies don't react well."
As part of R.C. Industries' new health plan, employees could take advantage of health screenings and have their lifestyle choices evaluated. The result was eye-opening, Curtis said, as some employees learned they had high cholesterol, high blood pressure or were borderline diabetic.
Certainly, Curtis practices the healthy lifestyle he preaches. Employees often ask him about his fitness regimen but, he jokingly noted, none has taken his offer to join him in an early morning run.
Double-edged sword
From his position as director of managed care at Elkhart General Hospital, John Kraft has noticed more local companies choosing consumer-driven health plans as a way to curb rising costs. He described this type of medical insurance as a "double-edged sword."
On the one hand, patients who have this type of insurance must become more educated about their health and be mindful that resources are not unlimited, Kraft said.
On the other hand, the high deductibles are causing some employees to opt out of health insurance altogether or skip out on paying their medical bills. Also, early reports on how these plans are functioning in the marketplace show a number of employees who have the insurance but, because of the out-of-pocket expenses, forgo medical treatment when a condition or ailment is starting -- only to have the illness become a larger, and more expensive, problem later.
Employers are drawn to these plans because they can lower the company's cost while still providing medical coverage for workers. Canceling insurance altogether could put employers at a competitive disadvantage when hiring new workers.
"The whole point of a benefit plan is to attract and retain employees," said Chad Hahn, account executive at Gibson. "The whole point of the employer is to have a happy, healthy work force."
Kraft, who also is executive director of the Elkhart Medical Organization, has not seen Elkhart companies dropping coverage. However, he noted, "if costs of health care keep going up and double-digit inflation every year, it could happen."
Education
Typically, when given a choice between a traditional health-care insurance that has a low deductible and co-pays for office visits and prescriptions and a consumer-driven plan, employees often pick the former.
Pete Giczewski, chief operating officer at Genesis Products Inc., learned that lesson when his company offered a consumer-driven plan as an option in June 2007. The reception among the employees, Giczewski recalled, "was pretty lukewarm."
Still the 8-percent enrollment did not discourage the COO. He believed and continues to believe the consumer-driven plan will save the company money on its premium costs as well as promote healthy habits among its workers.
He realized many probably did not understand the new plan and were put off by the $3,000 deductible for single coverage and $6,000 for family coverage.
With the help of representatives from Gibson Insurance Group, Genesis pulled small groups of employees off the factory floor for mandatory meetings where details of the consumer-driven plan were explained and questions were answered. The strategy apparently worked. When the plan was offered again in December, 40 percent of employees chose it.
Giczewski is also happy Genesis can continue to provide health insurance without struggling so much against rising costs.
"We want to offer health care to our employees," he said. "We believe that it helps us attract better employees."