EMPLOYEE BENEFITSHealth Care Costs Continue To Encroach On The Bottom Line
CHICAGO - The growing cost of employee benefits continues to take up a large portion of a company's annual budget. Experts from Acordia, the largest bank-owned insurance brokerage in the United States, gathered at the first-ever Aftermarket Financial Symposium to provide tips on managing health care costs, pension plans and more.
"[Health care costs] are between the third and fifth largest expense on a company's bottom line," said Dan Schmidt, senior vice president and director at Acordia. "If that expense increases at the rate of 15 percent - and it could - for five years in a row, it could effectively double in five years."
Schmidt, along with Brian Schweigel of Old World Inc. and Gina DiGirolamo, national director of scriptSMART with Acordia, presented "Managing the Volatility of Employee Benefits," moderated by Thom Jenkins of
Acordia.
The panelists gave tips on how to structure a program, as well as how to manage morale and change employee behavior.
"Any time you do a change in a program for the employees, there are effects to that," commented Jenkins. "When you shift a benefit program where the employees have to bear more [of the costs], one of the things you'll notice is a crossover into workers' compensation costs. Another thing to be very careful about is loss of productivity. When morale goes down, productivity goes down. When you do these programs, it's very crucial that communications programs are developed where the employee understands it."
As the workforce continues to age and health care costs continue to rise, it's crucial to educate your employees on improving their health. Healthy lifestyles can encompass everything from diet and exercise to quitting smoking and managing long-term illnesses.
If you can convince these employees to lead healthier lifestyles, the costs associated with their health care benefits can be reduced, said
DiGirolamo.
She noted that the number of people with chronic conditions is growing because of the aging Baby Boomers and that this group presently makes up about 70 percent of prescription drug users. Prescription drug costs are the most rapidly expanding costs in health care, she added.
"The single best, most effective thing you can do in your prescription drug plan is to encourage generic utilization," she said. "An average brand drug costs between $72 and $80 per script. An average generic is $17 per script. So you can do the math."
It's important to help your employees become better consumers of health care, and characteristics of an accountable consumer include someone who:
* Understands cost implications.
* Seeks health care information.
* Makes appropriate plan and provider selections.
* Pursues a healthy lifestyle.
* Communicates with one's doctors.
* Demonstrates self-care.
* Effectively manages one's chronic conditions.
* Practices prevention.
Schmidt said benefits are essentially a part of compensation, and although the employee doesn't always see it that way, it's an employer's job to communicate that fact.
"There are some pretty reliable predictions that the cost of the health care plan will exceed corporate profits in the not-so-distant future unless we take some pretty drastic action," he advised.
The two-day symposium, hosted by the Automotive Aftermarket Industry Association (AAIA), featured numerous presentations on issues related to the financial management of a company, including views from Wall Street on the automotive aftermarket and the state of mergers and acquisitions in the industry. About 150 attendees met for the symposium, 70 percent of which were high-level financial executives, according to Susan Medick, chief financial and operations officer for
AAIA.
