In my short tenure with CMCA, I've already found a least favorite recurring task. Each year around the end of November our insurance broker starts calling to set up a working lunch to look at our health insurance benefits. You'd think a free lunch would make any task more appealing but honestly I'm starting to dread the process. After some small talk our broker gives us the good news and the bad news. I always choose bad news first to get it over with. In each of the three times I've been involved, the news is always that it costs more to insure CMCA employees than we pay in premiums. In other words, our premium is going to go up. "So what's the good news?" I ask. "I think we can limit the increase." I whistle in mock pleasure. Within a couple of months of starting at CMCA he told me we were looking at a 47% increase! Anything less, I suppose, is icing. That time we had to switch companies to get a less painful increase. Even more scary, fewer and fewer companies are even interested in bidding on us. Our primarily-female business model, it seems, is prone to common female health conditions like pregnancy that make us expensive to insure. Further, the insurance/health industry seems to be getting screwier and screwier as rates across the country average about a 14% increase. I don't know how a nonprofit, much less a for-profit, can continue to absorb these kinds of costs. Our options include raising prices on our products (if we had a product), decreasing the quality of the benefit, or sharing part of the premium costs with our employees. So far we have chosen to continue paying 100% of employee premiums but that leaves us with the option to decrease the quality of benefit. Two years ago we were able to maintain essentially the same level of benefit by switching to Mercy Healthcare. They have been really good to work with and have offered very competitive options again this year. So we settled on roughly a 6% increase on our premium with slightly less coverage. Starting on January 1 we'll have to pay slightly more for some kinds of office visits, slightly more for some co-pays on prescription drugs and certain kinds of services, and have a slightly higher out-of-pocket maximum. Overall, I feel like we slid by with a relatively painless option for 2008. CMCA will pay thousands more for insurance this year but our employees will basically see the same level of service. But what about next year? Costs will continue to go up and we don't anticipate any meaningful increase in our federal funding. We're certainly exploring other ways to generate revenue but we also need to be thinking about cutting costs. Any guesses as to what the most effective way to decrease our health insurance cost is?
I'll talk about WELLNESS next time.
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5 comments:
Wellness will not make a difference if staff feels they are not being paid competitive wages. CMCA will continue to experience high turnover rates and the premiums will continue to rise with regularity.
While wellness in itself is an excellent concept; it runs completely counter to the current culture. It seems we run to the doctor for every little sniffle, ache or ailment. Not really all that suprising considering how much sick time CMCA doles out. If you look at it, CMCA staff receives a whopping 80% equivalent of annual leave in sick time. This model assumes staff will be sick almost as much as they are on vacation.
Now, since the most you can do with your sick time (if you don't use it) is to "buy" it back at a 3:1 ratio for annual leave; one cannot deny that this causes some staff to take unwarranted sick time. This may or may not involve a doctor visit, but it certainly gives staff an incentive to 'not be well'.
As managers, it is our responsibility to hire and retain the best staff possible. As Darin alluded to, the insurance broker was straightforward in admitting that our high female constituency necessarily causes our premiums to be higher. Does this mean we need to take a second look at our hiring practices? Certainly not - this would amount to prima facia discrimination.
However, I think good leaders convey their expectations clearly and concretely...and this begins with the interview process, is rigorously enforced throughout the probationary period and exemplified regularly thereafter. I'll leave it at that. The bottom line is that we might not be facing these yearly health insurance crises if we invested more time and effort into hiring the 'right' people as opposed to getting a warm body on the bus.
Darin,
A number of smaller local school districts (I won't provide names, but you could easily find out) formed a consortium to leverage lower insurance costs. Ever considered anything like this? I don't know if the district consortium could or would consider adding other non-profits, but there is certainly no harm in investigating.
Likewise, what are other non-profits in mid-MO doing? If you're all going it alone, you might start talking with other executive directors about pooling your employees to secure lower rates.
Two quick responses to the comments. First, Macy do you suppose every business and nonprofit in the country is hiring the "wrong" people? How else would we explain that the rising insurance premiums plague us all?
Second, I like the idea of pooling non-profits. It seems like a sound premise and I have looked into it. MACA tried it with community action agencies years ago and it was apparently a huge failure because pooling people with the same loss/claim rates doesn't do any good. Same thing with pooling with other nonprofits. We're generally more female and generally not a great loss risk. The one proven way to decrease premiums is to have people use the insurance less . . . aka . . . people are healthier.
Here's the way the strategy was used, as I understand it: when one district threatened a pull-out to find a different insurance company, the insurer figured they could bear the loss of approximately 150 insured employees. The consortium was formed, and the threat of loss made more of an impact on the willingness to negotiate. I don't know the precise number of insured within the consortium, but it's probably closer to 1,000 lost accounts if we were to switch; not an enormous number, but apparently enough to make them sit up and take notice.
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