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Manufacturers Face Health Care Dilemma
Many
manufacturers are rethinking their employee health care benefit plans in the
face of spiraling costs, according to a new study from the National
Association of Manufacturers (NAM).
The report, Health Care at the Crossroads, calls for new cooperative efforts
between government and industry to spread information about health care
coverage and providers. Other recommendations focus on ways to improve
healthy behaviors and enhance employee ability to manage health.
Increases in health care costs of more than 13 percent face more than 60
percent of manufacturers, the survey shows. Nearly one-third of small and
midsize firms report increases of more than 20 percent a year.
Based on a survey of almost 800 manufacturers, the study reports that nearly
all NAM members — 97 percent — provide health care coverage to their
employees, a higher rate than in any other sector of the economy. Also, many
manufacturers continue to offer health care coverage to retired employees.
High Contribution Level
The median employer contribution level is 80 percent, and nearly one quarter
of NAM members pick up the total cost of employee health care benefits.
Additional pressure comes from global competition, which makes it impossible
for manufacturers to pass on rising costs to their customers, the report
observes. And declining profits make it impossible to absorb the increases.
Passing costs along to employees is a limited option, too, the report says,
because of the negative impact of such a strategy in efforts to attract and
retain a skilled work force.
Adoption of managed care, competitive bidding, self-insurance, and programs
to manage pharmacy benefits has not been enough to stem rising prices.
New Programs
Companies are trying online disease management programs to help employees
deal with chronic conditions such as asthma and diabetes. Another promising
use of the Internet is in online benefit administration programs, which may
help cut nonmedical costs.
The study recommends a combination of steps to help small and midsize
manufacturers deal with increasing health care costs:
- Expand employee participation
in wellness and disease management.
- Work with health care
providers to reduce medical errors.
- Encourage the U.S. Department
of Health and Human Services to provide small businesses and their
workers with information about health care providers.
- Administer benefits programs
over the Internet.
- Establish group purchasing
arrangements for small and midsize companies.
- Encourage healthy employee
behaviors with financial incentives.
Broaden health insurance tax credits and deductions for
individuals.
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