Employers need not be mute about health insurance hikes

April 16, 2012
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Blue Cross Blue Shield of Michigan has announced it will hold 2012 third-quarter price increases for health insurance to an average of 7 percent for smaller employers. It is not exactly news to applaud — though it is greeted with a sigh of relief — that increases are less than the double-digit numbers to which employers have become desensitized.

The Small Business Association of Michigan acquiesces to the one issue that has the greatest variable impact on business costs, regarding it as “a fact of life.”

When juxtaposed with the story in the April 9 issue of Grand Rapids Business Journal regarding the trickle-down cost effect of empty hospital beds, it is a reminder that business owners can only have an effect on those “expected” increases by being vigilant and involved in those non-political associations that have the greatest impact on the increases.

The Business Journal reported on the Economic Alliance for Michigan, based in Novi, and the benefits from the leadership of both Ford Motor Co. Chairman William Clay Ford and Chrysler Group CEO Sergio Marchionne, among other state business leaders. The Journal has reported often on the long history of such work in West Michigan by the Alliance for Health, which also benefits from business and corporate leadership.

The efforts of such groups have a far greater success rate in controlling the root causes of those increases and equal impacts across the state.

Case in point: The EAM group and the AFH were able to guide state policy in review of hospital regulation, work that currently appears to have thwarted a costly plan by McLaren Health Care Corp near Clarkston to build a new $300 million facility in Pontiac. The plan included the intended transfer of its beds from the Clarkston facility to the new facility, in addition to a request for an additional 100 beds — even while the six to seven hospitals in the immediate area of the building plan show occupancy rates of 56 percent and an estimated excess of more than 700 beds. Grand Rapids, too, has seen its share of duplicative hospital services that add to price hikes.

Bret Jackson, EAM president, told the Business Journal in regard to the hospital expansions: “What (hospitals are) eventually going to do is reflect their capital expenditure in the rates that they charge the purchasing community. So we, the businesses and the patients around the state, will eventually pay that money back for that new bed tower, for that new hospital.”

Such impacts are not localized: They are eventually spread across the state in cost. The Blues will negotiate payment prices with hospitals again in the early fall — and set new rates as a result of those negotiations.

Business owners need not stand mute.

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