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Reining in Healthcare Costs
 Managing your healthcare costs—it's a constant headache for everyone,
but a particularly acute one for small-business owners. According to a Dun
& Bradstreet study, 50 percent of small companies surveyed reported that
their annual health-insurance premiums are ballooning—by an average of
13 percent a year. So how do you go about cutting these costs without
diluting your benefits package? Obviously, you can shop for a new plan or
increase employees' contributions. But what if you've already tried those
options? Consider these additional strategies:
Isolate nuisance costs. Areas such as prescription drugs and "behavior
health" coverage (psychiatric care, substance-abuse treatment) can
increase the premiums. Fine-tune your coverage so that your basic
healthcare plan remains a meaningful—but controlled—benefit.
Make sure cuts yield meaningful savings. Businesses that offer a choice
between managed care and traditional indemnity coverage often try to lower
costs by increasing the deductibles or co-payments on the indemnity option,
and then discover that there is little or no savings. "It doesn't work that way
because insurance companies realize that most employees will sign up for the
managed-care option,which means that's the place where you've got to make
meaningful cuts," says Vincent Gandolfo, a senior managing director at Frank
Crystal & Co., a New York insurance broker. For real bottom-line savings,
Gandolfo recommends raising your managed-care, co-payment charge on
"in network" office visits to $10 or $15, rather than the typical $5.
Aggressively monitor your plan. While cost control is important, other
issues matter as well, such as the quality of the plan and the popularity of
various features. It's much easier to negotiate cost-control issues when you
know which coverage features actually matter to your employees and which
benefits do not.
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