The uphill battle: advice from two insurance agents on how to get a grip on your health-care costs.

When 24 well-paid engineers recently learned that their Detroit-area employer was switching from a no-deductible health-care plan to one with a $100 deductible, they went ballistic.

"The client said he had a meeting with his employees and they went nuts on him! They are making $100,000 a year and they are worried about a $100 deductible," sighs insurance agent Ron Wolfe of Progressive Insurance Resource in Southfield.

"I told the employees that they were lucky I didn't own the company because I would have opted for a $250 deductible and a higher co-pay on prescription drugs. This employer is being very, very gracious about this."

At another Detroit-area company, an employee was miffed that her insurance plan would pay for only one mammogram per year. She wanted three, but would not pay the $75 per-test cost for the extra mammograms.

With reactions like that, it's no wonder businesses feel like they're caught between a rock and a hard place when it comes to health-care benefits. Employers are faced with the one-two punch of dealing with soaring costs--and passing some of those costs on to their workers.

On the monetary side, the raw figures tell a compelling story: Insurance premiums have risen 15-20 percent over the last four years, with soaring prescription drug coverage accounting for an estimated 60-65 percent of the overall cost.

Furthermore, workers in most U.S. industries have grown accustomed to "first-dollar" coverage in which the health plan pays for everything and the employer picks up the whole premium. Until the culture of endless expectation subsides, employers and their insurance agents will have to find creative solutions that satisfy employees without sending their employers to the poorhouse.

"It's very expensive to provide health insurance," says James Ralph of James Ralph & Associates in Detroit. "But, just like me as a small business person, the only way I can maintain an employee is to offer good benefits. So sometimes you have to bite the bullet and bear the cost."

"Biting the bullet" has an ominous ring to it, but there are ways to restructure health-care benefits and take some of the sting out of the increases.

While employees might complain about suddenly being required to share in the cost of their own health care, most workers adjust. Most companies, in fact, now require their employees to pay part of a premium, a deductible and co-pays on prescription drugs.

Finding the right health plan and keeping employees satisfied with it often depends on finding the right agent. Other good sources include other business people who have a relationship with an agent.

Good agents, says Ralph, will educate employees, stay on top of changes in the industry and be able to recommend a variety of suitable options from year to year.

Agents also should also be able to administer Section 125 plans and COBRA plans for ex-employees who pay their own premiums, but remain in the plan for a year. In some cases, agents don't handle the administrative details but can recommend companies that specialize in such services.

Employees should bear more responsibility for their health by adopting healthy lifestyles. Reducing lifestyle-related illnesses can reduce the sick population and help keep a lid on premiums (see page 20 to find out how wellness programs can save you money).

While there are services agents can provide and products they can recommend, there are no quick and easy solutions to the cost problem. Ralph, for one, believes 11- to 12-percent annual increases are likely for the next few years.

For employers and their workers, the ride is likely to continue--uphill.

Contract pressures

As small companies work hard to attract and keep employees by continuing to offer strong health-care coverage, many are faced with additional challenges created by union contracts.

"I've got a client who's unionized," says Ron Wolfe of Progressive Insurance Resource in Southfield. "Financially, he's struggling. We've had meetings with the union. We're trying to get them to allow us they don't want to do it. I told the union rep that they are going to have two choices: let us come up with something somewhere in between what they are having now or you might not have a company here for your members to work at."

Small employers whose workers are represented by the United Auto Workers are facing the toughest challenges. Wolfe says the the UAW expects small shops to provide similar benefits to those offered by the Big Three automakers.

Some unions are more sympathetic. "When you sit down with some of these union reps, you lay it out for them and you show them what the costs are and what they are going to be. It's nice to see when a union rep says, 'I dont't want to have my members, my constituents, on the street; give us a couple of different variables and let's see what you can come up with.'"

Five ways to control your costs

1. Add vision and dental coverage, which are less expensive than health coverage, while asking employees to pay a greater share in their health-care premiums.

2. Implement a "Section 125" program in which employee contributions to premiums can be made with pre-tax dollars, much like retirement plan contributions.

3. Use agents who specialize in health benefits, not those who sell a variety of insurance products and "dabble" in health care,

4. Check out the programs offered through associations, such as the Detroit Regional Chamber and the Health Underwriters Association.

5. Encourage employees to lead healthy lifestyles by sponsoring wellness programs.

Source: James Ralph & Associates