My hat is off to the Obama team for getting the healthcare legislation rolling. I admit I have spent less time than I should following this because I did not give it much chance of getting off of the ground. Frankly, I really do not know how this is going to impact our business or our employees, but at this moment I am willing to give the thing the benefit of the doubt and assume this is a step in the right direction. In thinking about what value I may be able to bring to the dialog, I thought I would post what I learn as I learn it and therefore provide one real world data point for people to follow.
With that in mind, here is a condensed overview of the current healthcare situation at CSG.
Current Situation: We are in our fourth year of what some people would call self insurance, and I call a do it yourself healthcare plan. With the help of a broker, an administration service provider, and two reinsurance companies, we have assembled our own healthcare solution. We struck out in this direction with two stated goals: 1) get control of costs and 2) prevent our benefits from sliding back any further. Our costs (equivalent of a premium) are $414.04 per individual and $1,182.99 for a family, and we use a preferred provider network that gives our people access to a good number of doctors for a reasonable co-pay and a manageable deductible of $500 per individual and a maximum out of pocket of $2,000 per year per individual. For this we require individual employees to pay 25% or $103.51 per month (and the company pays $310.53). We also offer dental at $40.91 total with an employee contribution of $10.23. For families we require the employee to pay 75% -- which is quite a burden on the employee, but we do it that way because the cost to the company is the same as for an individual.
When I started the company in 1997 we paid $129 per individual and had lower co-pays, lower deductibles, and lower max out of pocket. We never had a year with less than double digit premium increases (by percentage) and by the time we bailed out of that system in 2004, our premiums were up over 3X to $496 per employee per month. Our benefits were diminishing every year and our people were fighting with the insurance company over far more claims than we thought they should.
We offer healthcare coverage on these terms to every employee that has been with the company for 90 days or more. We do not require our employees to purchase healthcare and some elect not to because they get coverage elsewhere or perhaps they go uncovered. Because of these variations in the number of employees electing coverage, the company's portion of the cost of healthcare has ranged from a low of 4.09% to a high of 7.40% and an average of 5.92% over the four years 2006-2009. Because of the mix of individuals to families, the company only pays 67% of the total cost, making the average total cost as a percentage of payroll 8.83%.
I will do my best to share how the new healthcare laws impact our company. Feel free to post your experiences.