Keeping the Cost of Health Benefits Affordable and Sustainable: ICCD Hosts EACUBO Post-Conference
In recent years the cost of health care has increased far beyond increases in the cost of living or overall expenses of operating colleges and universities. Health care cost pressures are driving many employers to reduce their commitment to health benefits for their employees as well as for current and future retirees.
But other approaches to managing the cost of these benefits include addressing the underlying health of employees and retirees as well as encouraging them to be more prudent users of health care services. On October 11th in Boca Raton, Florida, the Eastern Association of College and University Business Officers (EACUBO) and the Institute for Community College Development partnered to offer a one-day post-conference workshop of expert presentations on the latest innovative efforts to manage health care costs.
This was the fourth in a series of collaborative leadership programs at the annual EACUBO conference. (For more information about ICCD’s programming for professional organizations, contact Barbara Viniar by email or at 607-255-7758.)
Joe Martingale, one of the nation’s preeminent health care strategists, and most recently the National Leader for Health Care Strategy for Watson Wyatt’s Group and Health Care Benefits Practice, presented an overview of the health care cost challenge, and moderated a panel with the following presenters:
Ron Fontanetta, a principal with Towers Perrin, a global professional services firm that helps organizations around the world optimize performance through effective people, risk and financial management, discussed current and emerging trends in US employer-sponsored health care programs.
Ken Cool, President of Emeriti Retirement Health Solutions, considered the development of sustainable strategies for retiree health security for aging campus communities in a federal age discrimination law and the recent changes to Medicare.
Louise Novotny, Director of Research at Communications Workers of America, discussed the issues of active and retiree health care from the perspective of employees, retirees and labor organizations.
Participants then had the opportunity to meet with each of the panelists and in small groups to discuss suggestions and action steps to bring back to their campuses.
Mr. Fontanetta of Towers Perrin presented data from their 2007 Health Care Cost Survey that projects costs and employer actions for the next year. “The burden on employers is becoming unsustainable,” he said. But only about half of employees in the Towers Perrin 2005 Consumerism Survey are open to sharing cost increases. And far fewer say benefit reductions are appropriate.
According to Fontanetta, the drivers of rising health care costs are delivery and provider practice, increased consumer demand, demographics, and behavior and health consequences. Increased consumer demand for new technology and new drugs, plus aggressive promotion, he said, help drive the upward spiral: twenty-five percent of Towers Perrin’s 2005 survey respondents said that they’ve asked their doctor about a drug they saw advertised on TV.
Fontanetta also presented specific case examples with an emphasis on the leading interventions that have proven successful to reconcile the financial management of health care costs and employee engagement in their own health and health care. “Employers can control, influence and understand key system components affecting people and costs,” he said, “by building a ‘culture of health.’” He recommends that employers set clear goals, understand their organization’s current performance, and identify where and how to improve results.
Fontanetta outlined a number of interventions that employers are taking to control health care costs. According to the Towers Perrin 2005-2005 report, the most popular steps include:
- changing plan designs and cost-sharing features to increase point-of-care accountability
- changes to prescription drug programs
- using communication strategies to engage employees in consumer-driven behaviors
- and implementing care management programs.
The workshop participants were most intrigued by Fontanetta's suggestions for lowering prescription costs and how they could go back to their campuses and analyze what’s already being done and what could be improved.
In his presentation "Building a Sustainable Strategy for Health Security in Retirement," Mr. Cool of Emeriti Retirement Health Solutions illustrated conventional benefit strategies that higher education institutions have used to control rising retiree medical costs. He explored the opportunity costs of higher education’s growing age-structure imbalance and slowing employee retirements. He examined the cost shifting among Medicare, employers and retirees; identified financing alternatives to the unfunded liabilities of traditional defined benefit retiree medical plans; and offered case studies of sustainable solutions for continuing employer engagement in retiree health care.
Louise Novotny of the Communications Workers of America presented "Creating Solutions to the Health Care Crisis." The principles for health care reform, she said, are universal coverage, comprehensive benefits, affordable premiums, fair financing, and quality care. When bargaining for health care, no single strategy works for every negotiation. Novotny noted that “issues of rising costs and declining access are beyond the ability of one employer, one union, to solve,” though "employers and unions have a mutual interest in crafting solutions." She outlined a checklist for starting a joint health care committee, and suggested areas of mutual interest:
- Analyzing cost and utilization data to identify cost drivers such as low adherence to medication for diabetes leading to higher future medical costs
- Developing approaches to containing costs without shifting costs, such as making medication for diabetes lower in cost to encourage adherence
- Focusing on quality initiatives
- Participating in coalitions with other employers and unions
- Developing joint public policy approaches
"In the current climate of rising health care costs," said Novotny, "both labor and management are struggling to find ways to maintain affordable, quality health plans. There is plenty of common ground for unions and management to work together. Through joint committees, unions and management can analyze their plans for true cost drivers and redesign their plans to address those issues. On the legislative front, when labor and management join together to work for solutions that address their mutual concerns, legislators are more likely to take heed."
