BENCHMARKING

MOLD BUILDERS FACE RISING COSTS: AMBA 2020 HEALTH AND BENEFITS REPORT

By Rachael Pfenninger, AMBA Project Manager A s health care costs continue to rise and employee participation remains steady, mold manufacturers are more strategic than ever in how they mitigate premium cost and the types of plans and ancillary benefits they offer to employees. With insight provided by AMBA’s 2020 Health and Benefits Report, mold manufacturers have an opportunity to benchmark their costs and plan offerings against those of their industry peers.

According to reported data in the AMBA 2020 Health and Benefits Report, the majority of respondents (97%) currently offer health insurance. Those that do not offer health insurance indicated they were small manufacturers with under $2.5 million in annual sales revenue and fewer than 20 employees.

2020

AMBA HEALTH AND BENEFITS REPORT

HEALTHCARE AND BENEFITS INFORMATION OFFERED BY MOLD MANUFACTURERS

While more than half of respondents reported an

increase of 5% or less, nearly a quarter of respondents indicated an increase of 16% or more. When looking forward toward 2020, many companies anticipated the same – nearly half of surveyed mold manufacturers reported experiencing or anticipating an increase of 6% or higher. (See Charts 1 and 2.)

According to a recent article published on Manufacturing.Net 1 , the cause of rising costs is price, not utilization. Not only are there fewer physicians per capita in the US than in other industrialized countries, but there are fewer hospitals available and higher administrative costs. The US also has higher diagnostic and procedure costs – in fact, the US does more MRI and CT scans than any other country.

18 the american MOLD BUILDER | Issue 2 2020 Other contributing factors include the amount the US spends per capita on pharmaceuticals (this number is nearly double what other industrialized countries spend) and the role insurance companies play in US healthcare. Because they have no incentive to reduce their costs, insurance companies simply mark up their prices every year to maintain their profit margin.

PARTICIPATION AND COST From early January to mid-February in 2020, AMBA surveyed 66 US mold manufacturers from 19 states on their offered healthcare plans and benefits.

Data in the final report represented more than 3,200 full-time employees, 2,300 of whom are enrolled in their company’s healthcare plan (an average of 73%). Companies between $2.5M and $4.9M reported the average highest participation.

Overall, survey respondents reported spending approximately $390,000 annually to offer healthcare and ancillary benefits to their employees – an average of $12,793 per participating employee per year (PEPY). Of the surveyed annual sales ranges, companies under $2.5M incurred the highest cost per employee. These companies reported paying over $13K per participating employee per year. This annual sales range also reported the lowest percentage of participating employees.

Trending data also demonstrated that the average healthcare cost per employee rose for companies reporting higher percentages of employees aged 50 or older, while companies with high percentages of employees 30 or younger tended to pay less, on average, per employee.

TACTICS TO HELP CONTROL PREMIUMS In order to help mitigate premium cost, some mold builders have implemented strategic offerings. The most commonly reported practices included moving to a high-deductible plan, offering health savings accounts, shifting premiums to employees, offering a Section 125 plan and offering flexible spending accounts. Other tactics employed by respondents included incentive-based wellness programs, gym club reimbursements, offering multiple plan options, reduced employer HSA contributions and moving to a self-funded insurance plan. (See Chart 3.)

HEALTH PLANS OFFERED TO EMPLOYEES The most common plan type reported by respondents was a preferred provider organization (PPO) plan, with 54% utilizing this plan type, followed by 45% that offer a high deductible health plan (HDHP). No mold manufacturer reported offering a point of

service (POS) plan. Of the plans that were offered, 76% are fully insured – only 24% of the plans offered are self-insured. Larger organizations are more likely to opt for self-insured plans than smaller manufacturers, with 40% of companies over $20M in revenue utilizing this option. (This is 20% to 40% higher than any other revenue range.)

ANCILLARY BENEFITS AND RETIREMENT PROGRAMS In addition to health insurance, many surveyed respondents offered ancillary benefits and retirement programs as well. For instance, 81% and 64% of mold manufacturers offer dental and vision benefits, respectively. Respondents also offered shortterm disability (74%) and long-term disability (57%) benefits. However, while 87% additionally offered employee-specific life insurance, less than half of this survey’s respondents (45%) offered dependent-specific life insurance.

In addition to opting to provide health and other medical coverage, approximately nine out of 10 surveyed respondents also offered a retirement plan. The most common plan type offered to employees is a 401(k), which 72% of manufacturers provide. Other retirement programs offered included a SIMPLE IRA (18%) and a Profit-Sharing Plan or SEP (2%).

Chart 1

Chart 2

ADDITIONAL PROGRAMS OFFERED Respondents also were given the opportunity to share other benefits provided to employees. By far, the most common additional offering named was tuition reimbursement, which 65% of mold manufacturers currently offer. This benefit was followed by profit sharing (39%), flex time (24%), company loans (17%) and employee assistance programs (11%). n Chart 3

REFERENCES 1. McCann, David. (2019, Nov 4). Companies Move to Limit Employees’ Health Costs.

CFO.com. Retrieved from https://www.cfo.com/health-benefits/2019/11/companies-moveto-limit-employees-health-costs/

TAKE CHARGE OF YOUR HEALTHCARE

By Rachael Pfenninger and Susan Denzio, AMBA

As healthcare costs continue to rise, and no relief appears to be on the horizon, research shows that there is a growing movement to minimize premium costs by designing a healthcare program that is carefully cultivated to meet the particular needs of an organization 1 .

In many cases, there are opportunities for mold manufacturers to follow suit. However, it is important that business owners and HR professionals understand what questions are most important to ask in order to assess the condition of their current healthcare plans and better manage those plans moving forward.

ASK YOUR BROKER 1. What is our Per Employee Per Year cost? More specifically, what is our Per Employee Per Month (PEPM) cost?

Understanding the per employee cost per year – and, more importantly, the cost per employee per month – is necessary for benchmarking and managing your healthcare costs from year to year.

20 the american MOLD BUILDER | Issue 2 2020 2. Can that cost be broken down in the following categories? • Claims PEPM o Medical o Rx • Administrative costs PEPM • For Self-funded organizations: Premium PEPM Understanding the cost breakdown between claims (medical and drugs) and the administrative costs provides a better overall view of the plan. By identifying and reviewing these buckets of spend, a business has a better view of the plan utilization. Higher utilization results in lower healthcare costs, because to a healthcare provider, this signifies better preventive maintenance. By asking for the data, employers have a vehicle through which to locate possible improvements or changes to the spend, which can impact the performance of their plan in a positive manner.

3. How did age demographics affect our health insurance risk rating and costs?

Both population growth and an aging population are drivers of health insurance prices. As people get older, insurance becomes more expensive, and an aging demographic typically requires more care than a younger one. Diving deeper into employee demographics will allow a business to identify how and/or if these factors are impacting the renewal rate.

4. What are the three primary drivers of our health benefit costs?

DIG DEEPER WITH YOUR BROKER: MORE QUESTIONS TO ASK The following questions will bring additional clarity to better manage your healthcare plan:

1. Do we have any data on the price of our most common services utilized? • How can we affect this? 2. Can you break down the pricing for our three highest cost claimants? • What can we do to affect this? 3. What is our Rx PEPM? 4. What is our average cost per script? 5. Can you identify our top three prescription spend categories? 6. Can you identify our top three high-cost prescriptions?

Tracking prescription data provides the knowledge needed to better manage resources for the best pricing.

ONE SOLUTION – A HEALTHCARE STRATEGY BASED ON DATA Healthcare ranks among the top three concerns of every business owner and yet, few apply a businesslike strategy (five-year plan) to their healthcare plan. There is no easy, one-size-fits-all solution for health benefits. The challenges, pitfalls and options are broad and diverse. Therefore, the AMBA, under the First Resource umbrella, has been working diligently on a healthcare solution that affords the ability to leverage the size of an aggregate group while maintaining individual choice.

First Resource has created a solution that is based on the same principles used to successfully run members’ businesses – it understands how and where bottom-line dollars are being spent and makes those expenditure decisions based on data. This healthcare solution is simple: Control the money, engage employees and attack high-cost medical and prescription services, while allowing members the flexibility to implement a risk-management strategy that best meets their needs. For more information on this healthcare strategy, email info@amba.org. n

REFERENCES 1. Collins, Michael. (2019, Jan 28). Manufacturers Face Rising Healthcare Costs.

Manufacturing.Net. Retrieved from https://www.manufacturing.net/labor/blog/13249190/ manufacturers-face-rising-healthcare-costs

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