Magazine article Workforce Management

Self-Thought: Companies Ponder Bringing Insurance In-House

Magazine article Workforce Management

Self-Thought: Companies Ponder Bringing Insurance In-House

Article excerpt

In 2009, upscale appliance-maker Viking Range Corp. was looking for ways to reduce health care costs without sacrificing its generous benefits plan. Located in the Mississippi Delta--a region known for the blues as well as some of the nation's worst health problems--Viking's employees struggled with chronic conditions such as diabetes and obesity.

With costs escalating dramatically in recent years, the company had no choice but to start charging employees $60 a month for health insurance premiums, says Beth Tackett, human resources director for Viking. Until January 2010, employees paid nothing. The company also increased deductibles by $100. But Viking discovered the greatest cost savings after it launched a wellness initiative based on its employees' medical histories.

Between 2009 and the end of 2010, Tackett says, the company saved nearly $1.2 million on annual medical and pharmaceutical claims. She credits the wellness program, which provides employees with access to a registered nurse to help them manage their medical care, free classes on healthy cooking at the Viking Cooking School, health fairs and lunchtime speakers.

Key to the success of the initiative, Tackett says, is that Viking is self-funded, meaning the company generally pays for the health care expenses of its employees out of its own pocket rather than relying on an insurance provider. Tackett says that being self-funded gives Viking the flexibility to tailor its health care plan in a way that allowed the business to cut costs even as it helped employees.

"When you're self-funded, you are able to make changes to your benefit plans so you can better meet the needs of your employees," she says. "You can adjust your deductibles, copays and out-of-pocket expenses in a way that's most beneficial to them. You can't really do that with a fully insured model."

In a fully insured plan, employers pay a fixed premium to an insurance carrier such as Blue Cross and Blue Shield that pays claims based on the company's benefits plan. Fully insured programs are standardized to meet state insurance regulations, so unlike self-funded plans, they cannot be modified, experts say.

But the most significant advantage that self-funded plans offer to employers is access to medical claims data, something insurance companies typically do not share with employers, says George Pantos, executive director of the Healthcare Performance Management Institute in Bethesda, Maryland. …

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