Tackle health-care costs now

By Brad Pricer

As large-scale health-care reform is debated in Washington, many credit unions are taking a “wait-and-see-approach” with their immediate health plan situations. This is a dangerous approach given continued double-digit increases in group plan premiums for 2010.

The outcome of health-care reform is uncertain, but one thing seems consistent in all proposals: saving a single-payer plan. Even if a plan passes, none will remove the need for employers to stem the pattern of increasing costs within their own plans.

The most effective way for credit unions to control long-term health-care costs is consumerism, and there’s no need to wait on Washington to implement or continue this strategy.

Consumerism, often referred to as consumer-driven health plans (CDHP), has many definitions, but it has two key elements: employee education about the true costs of medical services and employee accountability for their medical care purchase decisions.

In short, employees need to have skin in the game.

The two most common CDHPs are Health Savings Accounts (HSA) and Health Reimbursement Arrangements (HRA).

HSAs:

• Pair a high-deductible health plan with a tax-exempt trust or custodial account where interest is earned tax-free and not subject to forfeiture;
• Allow employer and employee contributions, and any employer contributions immediately vest with the employee;
• Are growing rapidly, although that’s driven by individual HSAs, not group plans; and 
• Have strict requirements on plan design.

Credit unions have been slow to adopt HSAs, primarily because the employer’s contributions vest to the employee and go with the employee if he or she decides to leave.

In addition, the complex and rigid plan design requirements can be difficult to explain to employees.

HRAs:

• Allow employers to share the costs of high-deductible health plans with employees;
• Allow only employer contributions, which don’t vest with the employee; and
• Allow employers to be creative in the design of these plans to control employees’ health-plan behaviors (e.g., employees using the hospital emergency room vs. urgent care or a regular appointment with their physician).

Credit unions increasingly are using HRAs to shape their employees’ health-care purchasing behaviors.

When implementing a CDHP, employers need to provide access to information to allow employees to become better health care consumers. Such resources include carrier Web sites and network provider listings, medical libraries, health risk assessments, Rx comparisons, and health calculators.

Regardless of what happens with health-care reform, here are some recommendations for credit unions to implement now:

• Develop a long-term strategy and decide what type of CDHP is appropriate for your employees.
• Explore different types of CDHPs and combinations of them. Your broker or carrier can be of assistance here.
• Create/evaluate contribution strategies.
• Educate employees on health costs. Eliminate the “entitlement” perception, and create the understanding it’s “our” money being spent.

The sooner you address the core reasons for increasing health-plan costs, the better situated you’ll be for whatever reform, if any, comes out of Washington.

Brad Pricer is employee benefits brokerage sales and retention manager for CUNA Mutual Group. Contact him 800-356-2644, ext. 6786.