TSYS employee Lori Malone works out at the company’s gym Monday through Friday, partly to set a healthy example for her children, but primarily to offset a family history of high blood pressure and cholesterol.
Having gotten into the routine about 12 years ago, the exercise also pays off with a better attitude and focus at work and at home, said the account manager, 39, who has two daughters, ages 20 and 16, and a husband, Mike, who also handles accounts for TSYS and stays fit at its gym.
But aside from feeling good, there’s also a monetary benefit to sweating it out more than an hour per day on the treadmill or on the Riverwalk if the weather’s pleasant, Malone said.
“Knock on wood and thank goodness, but I really don’t spend a whole lot of time at the doctor,” she said Friday. “I guess there’s a correlation between the two. I don’t see the rising costs in our premiums.”
But rising they are. Despite health-conscious staffers like Malone, large Columbus employers such as credit-card processor TSYS and banking firm Synovus Financial Corp. are bracing for increased health insurance costs in 2011 and beyond.
Some attribute it to the typical inflationary surge in medical and prescription products and services. But the Patient Protection and Affordable Care Act passed by Congress and signed into law by President Barack Obama earlier this year also appears to be a major factor.
“I think, like most companies, we’re going to have some increase, and there will be some increase that will be impacted by the changes that were made based on the health care reform legislation,” said Mary Stranger, director of benefits in the human resources department at Synovus.
How high will health care costs go?
Just how high the costs paid by employers go and how much is passed along to workers is a tough number to pin down. Synovus, for instance, is still conducting an analysis of its employees and their medical claim experiences and other risk factors that impact pricing. That work is used to create health care plans from which workers will be able to choose during upcoming enrollment periods.
However, several surveys released recently point to sizeable premium hikes on the horizon. A Towers Watson survey of nearly 500 large and midsized U.S. companies found that costs are projected to increase 8.2 percent to an average annual outlay of $10,730 per employee next year.
Aon Consulting, meanwhile, through a survey of insurance companies, estimates costs will jump 10.5 percent to 11 percent in the coming year, with health care reform possibly adding between 2 percent to 5 percent to the tab over three years.
Though Synovus — a self-insured employer that contracts with Blue Cross Blue Shield of Georgia for coverage — is still studying its costs and plans, those forecasts are pretty close, Stranger said.
“I would validate with you I’ve heard the 8 to 12 percent range among the different consultants,” she said, pointing out several factors that contribute to pricing. They include the size of a company, the depth and quality of services and physicians in a market and risk factors in the local population.
“In general, when we’re faced with increases, we work to balance that cost between the company and the team members,” Stranger said. “So we really take a lot of time to look at the plan design and we try to mitigate any significant cost increases for our team and balance that out.”
Combating increase costs
One way some employers are considering keeping prices down is taking advantage of an option that allows them to be “grandfathered” into the health care reform law — and exempt from some of the mandates — if they don’t make certain changes, such as hiking coinsurance requirements for workers.
But Mercer, a global consulting and outsourcing firm, found in a survey that only about half, or 53 percent, of employers believe that option is a good one for them. Others said it takes away their flexibility in keeping company costs to a minimum.
Most firms in the Mercer survey said they are hoping to hold cost increases to about 6 percent, about the annual average hike over the last five years. Fifty-seven percent said they would pass a “somewhat greater” portion of costs on to workers, with coverage of family members rising more sharply than employee-only coverage. That appears pegged to a provision taking effect Thursday that raises the age limit of insured children of an employee from 19 to 26.
“We are expecting par increases similar to what those surveys have indicated,” said Suzanne Kump, group executive with the human resources department at TSYS. “We’re still doing our pricing and analysis to see what we have to do to try and not have those large increases, such as if there are plan design changes, etc., that we might need to make.”
Both Synovus and TSYS begin their open enrollment period for employee health care insurance Nov. 1, with it running until Nov. 15. TSYS has about 5,000 employees across the United States, while there are about 6,400 Synovus employees scattered throughout the Southeast.
Supplemental health and life insurance firm Aflac Inc., meanwhile, employs nearly 4,300 in the U.S., about 3,900 in Columbus. The company, with an open-enrollment period of Oct. 11-31, declined an interview request to discuss its employee health care costs and efforts to manage pricing.
“Aflac is vigilant about controlling costs and works hard to minimize any increases to employees,” Aflac spokeswoman Laura Kane said in an e-mail.
“One way we do that is by picking up 75 percent of the overall costs for our employees,” she said. “We have done a good job of managing health care costs for this year and we believe that any increase we might see will be less than the national average.”
Even as TSYS studies its costs and develops coverage plans for its employees for 2011, Kump said the company anticipates continuing increases in coming years. The health care reform legislation won’t be fully enacted until 2014.
“We have been communicating with our leadership group, telling them that these are the things that are coming,” she said. “We’re trying to help educate the leadership so they can cascade it down to their work force and let them know that there will be changes.”
TSYS, like many companies, also is preparing for a renewed emphasis on employee wellness in 2011, Kump said. The firm will let staffers know that exercising can help them control weight and ward off potentially debilitating and financially costly health complications such as diabetes, high blood pressure and high cholesterol.
“We already offer a free health assessment and give flu shots to all of our employees,” she said. “We’re going to educate them more on the benefits of overall fitness and taking care of yourself.”
Small businesses, on the other hand, face their own challenges in the evolving health-care landscape.
Though the provision starts in 2014, companies with 50 or more workers that don’t offer access to coverage will have to pay a $2,000 fee per full-time employee — excluding the first 30 staffers. Those businesses with fewer than 50 on their payroll would be exempt.
That provision, among others, isn’t supported by the U.S. Chamber of Commerce and its affiliates. The agency cites estimates that up to 220,000 small businesses totaling 26 million workers may be impacted by that portion of the reform law. It believes enough businesses will pay the fees rather than offer insurance, pushing noninsured rolls higher.
“A lot of employers are starting to think about their strategy between now and then: Am I going to be able to continue to afford benefits?” said Katie Hays, executive director of congressional and public affairs with the U.S. Chamber of Commerce in Washington.
“But it really treats employers as one size fits all,” she said. “A bank, for example, may have on average higher wages than a restaurant, yet they are going to be required to spend the same and cover the same things. Treating employers as one size fits all is just going to be unsustainable in the long run.”
Hays and Charlie Harman, chief of staff for U.S. Sen. Saxby Chambliss, R-Ga., were in Columbus Friday to discuss health care reform and its impact with more than 40 business owners and executives. The workshop was organized by the Greater Columbus Chamber of Commerce.
The gathering came about six weeks before the Nov. 2 general election, a fact not lost on the group of Columbus business people and those addressing them Friday.
“I encouraged them,” Harman said. “In fact, we said: Now is the time, get involved, let your voices be heard, and then vote November 2. Vote, get involved.”
