Curing high health care cost headaches.

• Author: Hill, Robin Mackey
• Position: Includes related articles

When he realized last year that the cost of providing health care coverage to his 30 employees had tripled since 1985 and was about to total $12,000 a month, Wes Stoecker knew he had to do something. As owner of Anchorage's Electric Distributors Inc., he simply could not afford to pay $144,000 a year for employee health insurance.

Before making changes to his policy last fall, Stoecker had paid the entire cost of providing health insurance to his employees and their dependents -- including dental care and life insurance. Employees paid a $100 deductible and 20 percent of insured expenses up to $1,000, after which the insurance company paid 100 percent of covered expenses.

As of September, however, Stoecker's employees were offered a $500 deductible, $3,000 total for out-of-pocket contributions, and an insurance company-employee split of 50/50, rather than the previous 80/20. Employees were justified in viewing the changes as a reduction in compensation, says Stoecker.

"I just looked at it as a cut in pay," he says. "It's as simple as that."

By passing some of the costs to employees, Stoecker avoided a $3,000-a-month rate increase and was able to keep his monthly insurance premiums at about $9,000. Even so, providing employee health insurance is his third largest expense after salaries and rent. And although he was able to avoid a significant cost increase when it came to renewing his policy this year, Stoecker foresees a time when he'll have to limit what he spends per month on health insurance and pass additional costs on to his employees.

"I suspect the day will come when we'll have to start charging them for it," he says.

While researching ways to cut health care costs, Stoecker found that he could save an additional $4,000 a month by simply giving employees a raise and allowing them to buy individual coverage. "I found that the individual could go buy insurance cheaper than we could as a group, but they would have had to qualify," he explains.

For some people, like an employee diagnosed with cancer, it would have been difficult, if not impossible, to qualify. Stoecker says he also was concerned that some employees -- most likely younger workers feeling somewhat immortal -- would pocket the additional money and forego coverage.

When discussing recent changes with employees, Stoecker found that very few realized how expensive insurance was. "I don't think any of them really thought about it," he says. "The few I mentioned it to were dumbfounded. They realized it was a benefit we just couldn't afford."

Time for Drastic Change

Health care costs in the United States will continue to skyrocket unless drastic measures are taken to revamp the country's health care system and the method by which Americans pay for such services, say national health care experts.

Although projections vary, it is estimated that in 1992 the United States spent $809 billion on health care, or about 14 percent of the gross national product. Unless current trends change, the Congressional Budget Office expects the total price tag for health care in this country to reach nearly $1.7 trillion by the turn of the century.

In Alaska, health care expenditures have increased more than 300 percent since 1979, according to Sen. Jim Duncan, co-chair of the state's Health Resources and Access Task Force. Alaskans spent an estimated $1.7 billion on health care in 1991. That figure is expected to reach $6 billion to $7...