Firms Change Health Strategy

Switching the health plan for its 150 employees from one with no deductible to a plan with a $1,000 deductible meant more than $20,000 in annual savings for Valley Community Clinic.

David Adelman, a partner in the law firm of Greenberg & Bass in Sherman Oaks, also said the high cost of health care continues to be a great concern for their business. The company has managed to keep providing health coverage for its 25 employees but if premiums keep rising, Adelman said they can’t promise that eliminating health care benefits altogether won’t be a possibility in the future.

“We’re doing everything we can to continue offering our employees the best health care coverage we can afford. We’ve saved about as much as we can by switching to our current plan, but is it still a concern for us? Yes.”

Before switching to its current plan over a year ago, Greenberg & Bass used to offer its employees an HMO plan with a deductible of $250. But “the rates were killing us, premiums were getting out of hand,” Adelman said. So the company switched to a high deductible plan – a $2,300 deductible - and decided to self fund an internal plan to help employees cover the high deductible. With the help of their self-funded plan, employees continue to pay a deductible of about $250.

“Essentially it’s cheaper for us to self fund our health plan than to pay the premiums for comparable coverage,” Adelman said.

Low premium plans offered by health insurance providers have experienced a boost in enrollment in recent months, reflecting business owners’ concerns.

“There’s no question the economic downturn has had a significant impact on how employers evaluate their healthcare plans,” said Gina Stassi, Vice President of Product and Marketing for insurance provider Health Net.

“That money has allowed us to keep one of our health programs operating,” said Irina Pogosyan, Director of Human Resources for the non-profit organization based in North Hollywood. “Every penny we save counts.”

Like Valley Community Clinic, businesses in the San Fernando Valley already pressured by the financial crisis, are finding it increasingly hard to provide healthcare coverage for their employees and many are switching to more affordable plans, often with high co-pays and high deductibles, in an effort to cut costs.

“Company executives are struggling,” said Barbara Oberman, founder of the insurance brokerage firm Oberman Insurance Services, based in Calabasas. “If they haven’t already downsized to make their plans more affordable, they’re thinking about it.”

Health care costs represent the second to third largest expense for businesses, and insurance premiums have increased almost 300 percent since 2002 in Southern California, she said. As a result, businesses struggling to remain profitable and operate within their budget in the current economic climate, have been forced to take cost-saving measures.

Pogosyan said the clinic was faced with a 19.5 percent increase in healthcare costs last November, when it decided to stop paying 100 percent of the health care coverage of its employees and switch to the deductible plan.

“The cost was just too high, we were forced to switch to a lower plan,” she said.