The insurance manual, which is distributed to every new employee and updated every April or May, is easy to read. As last amended, it has sections on medical, dental, life and accidental death, long-and short-term disability, and reimbursement (flexible spending) accounts. The sections are refreshing in their approach. Each begins with definitions of the relevant jargon, such as "covered charges," "coinsurance," and "evidence of insurability." Options are listed, described, and compared with one another in some detail. Services that are not covered, such as periodontic treatment and cosmetic surgery, are spelled out as well.
"The more we can educate our employees, the more they'll understand that they're responsible, too, for getting the kind of coverage they need," says Troy. "Once they see that, they'll also recognize that it's in all of our interests to manage and control the company's health-care costs." One sign of success: Troy conducts exit interviews, and to her knowledge HBCS has never lost an employee because of dissatisfaction over health-care or other benefits.
Troy also distributed a six-page total compensation booklet, personalized for each employee. Along with other information, it included a statement of the individual's insurance choices and a dollar figure for the cost of insurance benefits and salary.
Collections supervisor Smollen says when she receives her personal-compensation statement and sees how much insurance costs, it helps her understand the financial pressures the company faces at renewal time. "To be honest," she says, "I think companies should circulate that information to their employees every month to keep reminding them of that fact."
This year, unlike earlier years, Troy and Schloss began the search for innovations for 1992 during May and June rather than July and August. Gilbert A. Valdez, HBCS's new CEO, himself a former insurance-industry executive, is keeping Troy on her toes. "I refuse to believe that insurance costs are any more impossible to control than any other operational costs," he says. Then he smiles. "My attitude may make Deanna's job harder than those of many of my other departmental managers. But she's done a great job of controlling these costs so far."
Troy has no illusions that insurance management is going to get any easier in the current economic climate. "So far, we've been able to avoid making any unpleasant cuts in coverage, in part because we've been growing so quickly. But when revenue growth slows down -- or industry prices rise too high -- I'll have to begin making some harder trade-offs."
She pauses, but speaks again with confidence. "If we can just keep educating our employees about what we're doing and why, I believe we'll be able to keep them on our side about controlling insurance costs."
LET'S MAKE A DEAL
What you need to know to negotiate better rates with your health insurer
* Know your company's claims-loss records. These are statements available from insurance carriers detailing every claim filed by employees by type, cost, and so on. Look for ways to argue that covering your company hasn't been costly enough to warrant big price hikes.
* Start negotiating early. Begin at least six weeks before annual price quotes are due, so that you won't be boxed into accepting an unnecessarily high rate or risk losing valuable protection.
* Shop around, but not too frequently. If an insurance carrier believes your business is good only for a year or so -- and that then you'll start soliciting bids from the competition -- it probably won't bother to court your company with a low bid.
* Don't buy too much insurance. Again, claims-loss records will tell you if you're paying for higher coverage than your employees typically use.
* Stay flexible. That will let you take advantage of price discounts your insurer may offer when it wants to increase market share for a particular type of policy.
* Be aggressive. Use any service failures, glitches, or other problems you encountered with your insurer during the past year as justification for keeping rates lower. Keep careful records, including dates and full descriptions of problems.
* Focus on major, not minor, savings. You'll bog down negotiations if you focus on policy changes so small that savings won't be worth the resulting paperwork and administrative hassles.
* Hire an independent insurance consultant every five years or so. He or she can do what's known as a conceptual analysis of every aspect of your insurance coverage. Expect to learn about missed opportunities, excessive costs, or problems with your broker.
CAN YOU TOP THIS?
Hospital Billing & Collection Service (HBCS) has kept an eagle eye on its health-insurance costs since the company opened its doors, six years ago. As a result individual health-insuarance costs have risen only 18% over the past five years; the increase for family policies has been 37%.
Individual rates Family rates
(monthly) (monthly)
1987: 27 employees* $114 $283
1988: 64 employees* $74 $204
1989: 90 employees* $108 $298
1990: 122 employees* $134 $370
1991: 123 employees* $135 $387
* at year-end
1987: Standard plan, no preventive-care benefits, sold by high-risk employers' pool. If HBCS had stayed with plan, costs would have risen 270% by 1991.
1988: Switched to regular carrier. Package included $200 medical deductible; dental, disability, and preventive health-care insurance; and life insurance equal to one year's salary. Employees could pay more for enhancements.
1989: Raised deductible on prescription-drug card from $1 to $3 on generic and $3 to $5 on brand names; lowered cap on accident coverage from $500 to $300 (Higher cap not used by employees). Added HMO option. Broker suggested raising out-of-pocket limits on all health costs; HBCS decided too costly in employee relations.
1990 Switched HMO companies to control costs. Broker suggested raising deductibles, eliminating prescription-drug card; company decided against changes.
1991: Switched carriers because insurer left group-health business. New plan identical except insurer didn't offer cosmetic surgery or option to pay more for $100 deductible. Broker suggested eliminating orthodontics, raising out-of-pocket caps, eliminating prescription-drug card; company decided against reducing coverage.
