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Claim Your Free Copy of Overtime Primer: Highlights from the New Regulations

The federal DOL overtime regulations go into effect this year. Are you ready?

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This report includes a summary of key changes, including the salary level test and salary basis test.

As a bonus, we've included a handy flowchart to help you determine exemption status under the FLSA.

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July 03, 2002
Control Health Costs by Empowering Employees
For a Limited Time receive a FREE Compensation Market Analysis Report! Find out how much you should be paying to attract and retain the best applicants and employees, with customized information for your industry, location, and job. Get Your Report Now!
owering employees to take charge of their health care decisions is a critical step in controlling escalating benefits costs and creating a market-driven healthcare system, according to a health-care specialist with the consulting firm Watson Wyatt.

"While there are many important changes that can be made to health plans to produce savings, the system will remain inefficient until employees exert control," says Joseph Martingale, best known for his work advising many of the nation's largest companies on health care costs and quality.

"Empowering employees as health care consumers will begin to force health plans, health providers, pharmaceutical companies and other actors in the health care system into the kind of robust competition for market share that exists in other sectors of the economy. Competition for the attention and dollars of consumers should result in delivering higher quality services and greater efficiency," Martingale says.

Employers have a vested interest in encouraging employee involvement. Double-digit price increases have sent corporate America scrambling to find new ways to lower health benefit costs. With first-generation managed care at a saturation point, many companies are seeing price jumps of 12 to 15 percent for 2002-and similar increases seem likely to continue.

Despite these increases, most employees have been largely insulated from the true cost of health care due to both the introduction of managed care and an inflation rate that has outpaced health plan provisions.

Solving the problem requires transforming employees into educated, active health care consumers. One of the ways to accomplish this is by increasing employees' financial responsibility for their health care services.

"Employees are not likely to become more prudent buyers without having more financial involvement," Martingale says. Examples of strategies to increase employee involvement include:

- re-introducing deductibles and coinsurance.

- experimenting with personal health account plans coupled with high deductible PPO plans.

- implementing multi-tier benefits with higher co-payments for less efficient and effective physicians, facilities and therapies.

But financial incentives alone are not enough. A second critical component of employee empowerment is education. "Employees shouldn't feel like they have to solve the health care system's problems entirely on their own," Martingale says.

"Employers must play a role in providing workers with access to information that helps them select high-quality providers, better understand the cost of services, measure their health risks and manage chronic diseases, among other things. These steps can have an immediate impact."

"The goal should be to help employees become better educated as well as more accountable, so that they are more selective when making health care decisions. In response, the players in the health care system will have to compete to attract employees' health care dollars, bringing much needed market-based reform to the health care system," concludes Martingale.

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