SMACNA knows how very important it is for local areas to manage costs associated with their health and welfare funds. To this end, local area trustees have been implementing various measures aimed at cost containment over the last few years. In order to capture best practices on cost containment, SMACNA surveyed SMACNA chapter leadership and local trustees on actions they have taken or are considering taking. Below is an overview of the innovations implemented at the local level:
Increased Deductibles. Increasing deductible for individuals and families was one of the most frequently cited examples of costs saving measures undertaken by local health funds. In one area, the trustees raised the individual and family deductibles from zero to $250/$750 respectively. This fund saw an almost immediate savings as there was a corresponding drop in usage. The implementation of a Health Reimbursement Account (HRA) or Health Savings Account (HSA) program often accompanied an increase in deductibles and co-pays to help offset the cost increase to plan participants while still incentivizing them to make wise health-care decisions.
Increased Co-Pays. Increased co-pays were another frequently sited cost savings measure that has been implemented by local health funds. Health funds looked at ways to structure the co-pays in order to incentivize plan participants to make wise health-care decisions. For instance, plans increased emergency room co-pays while establishing a second less expensive urgent care co-pay to help steer beneficiaries to urgent care services when their medical needs do not require emergency room services. We are sure you’re aware of the significant cost differential for identical services at these two types of facilities.
Adjustment of co-pays to incentivize decisions to lower cost appropriate alternatives is also reflected in the change some plans have made in prescription drug co-pays where the co-pay for generic drugs is significantly lower than their name-brand counterparts. Health plans that have implemented these changes have also seen cost savings either in their premiums, if fully insured, or in the costs paid by the fund itself to providers.
Wellness Plans. Adoption of wellness plans continues to be an area for cost-savings that many plans are considering. A few plans have implemented wellness programs but believe it is too early to judge how effective the program will prove to be. Other trust funds have implemented targeted programs aimed at specific conditions such as providing prenatal education and support.
Consolidation of Smaller Plans. Some areas are looking at merging their local health fund with other smaller plans in their general region. The SMWIA is actively encouraging their local unions to consider the feasibility of regional plans. Since rarely are plan structures identical in different trust funds, this possibility requires research and advice before it can move forward. At this point, we hear that funds considering this option are in the process of having the consolidation potential reviewed by consultants, including actuaries.
Perhaps the Most Difficult Thing to Achieve. While not specific to a particular plan change, more than one respondent emphasized their belief that successful cost containment depends on trustees changing their mind set to move past a business as usual mode and become proactive in making wise decisions using fund consultants’ input.
The above is just an overview of the responses to SMACNA’s survey. We would encourage you to look at the “Free Advice from Your fellow Trustees” that posted last year at this time with examples of what cost saving measures three different areas had taken at that time.
The SMWIA has also surveyed its local trustees and unions to obtain their feedback on successful cost saving measures. Once we’ve had an opportunity to review their results, we’ll be sure to update you on any different cost containment strategies they identified within the sheet metal industry. SMACNA will share our results with the SMWIA so that labor and management trustees have as many cost-savings strategies to consider for their local health plans.