What comes to mind when you think of insurance agents? Pioneers? Mavericks? Those are the words that ERC (Employers Resource Council) President Patrick Perry uses to describe Robert J. Klonk, executive vice president and director of group benefits for Oswald Companies, a Cleveland-based firm that specializes in customized insurance and risk-management solutions for businesses.
The basis for Perry's accolades can be traced to 1998 and a cocktail napkin on which Klonk diagramed what he saw as the future direction of health care — pools of employers who embrace their role in promoting healthier lifestyles to benefit employees, while reducing insurance claims and premiums. From that napkin, a consortium was born: ERC Health, for companies with 51-plus employees. Its success — more than 160 companies accounting for 13,000 employees — led to the recent formation (2006) of a second ERC Health consortium for companies with two to 50 employees, which now has about 100 participating companies representing 1,500 employees.
ERC is Northeast Ohio's largest employers' professional service organization dedicated to human resources, serving more than 1,300 organizations that account for nearly 400,000 employees in 22 counties. Perry joined ERC as president in 1998 and, months later, found himself meeting with Klonk over dinner to discuss what ERC members were "screaming" for: help with their health-care needs.
"Although there were other association (health-care) plans out there at the time, we developed a program that is truly unique in the way we manage risk and reward employers," Klonk says. The ERC plan was the first to offer an "integrated health-management program" with built-in incentives.
The ERC Health Academy's programs include regular health screenings and educational offerings on prevention (preventive-care exams, immunizations, prenatal care), behavior (exercise, eating habits, stress management), self-care (allergies, indigestion) and disease management (diabetes, asthma, depression).
"What ERC Health accomplishes is a long-term reduction in claims due to long-term changes in their behavior, lifestyle and overall health," Perry says. "The underwriters (Anthem Blue Cross Blue Shield for the 51-plus employee program and United Healthcare for the two-50 employee program) recognize these accomplishments by holding down rate adjustments."
In fact, nearly 75 percent of the participating organizations in the ERC Health (51-plus) program received single-digit rate adjustments last year, and 20 percent received no rate increase or rate reductions of up to 10 percent. "These changes are resulting in millions of dollars being saved in health-care premiums," Perry adds.
Simply put, "ERC Health has some teeth to it," says Frank Bloomquist, regional vice president of Anthem Blue Cross Blue Shield. "I was skeptical when I first joined Anthem in 2005 because I didn't see how it could be that different. But when you see the data that shows ERC Health is running better than normal pools in terms of utilization and claims, you know it's working."
Achieving both better health and rate reductions is serious business, but that doesn't mean it can't be fun. At Mentor-based Cres Cor, a maker of heavy-duty food-service equipment and a three-year ERC Health participant, many of the company's 186 employees are walking more, losing weight and even winning prizes such as exercise machines and gift cards, courtesy of Cres Cor. The manufacturer, like other ERC Health participating companies, strives to hit certain goals throughout the year in exchange for lower premiums.
According to Human Resources Manager Melissa James, those goals include a company-sponsored health day with 75 percent employee participation; a 90 percent completion rate of a health-risk assessment; and various "behavioral change" events resulting in 50 percent participation. For those who enjoy good-natured competition, these events are more fun than the term "behavioral change" implies.
Take the 10K-A-Day walking program, which equips participants with pedometers and a goal to walk at least 10,000 steps a day by the end of the eight-week program. Participants not only emerged from the program in better shape, they were also entered in prize drawings.
A Holiday Weight Maintenance Challenge program in 2006 challenged Cres Cor employees to maintain their weight during the food-indulgent weeks between Thanksgiving and New Year's Day. Eighteen employees contributed $5 each to participate and there was a company match, resulting in a $180 pool split among the 14 successful participants.
In 2007, James changed it up a bit and encouraged employees to participate in the Lighten the Weigh eight-week program (Oct. 23 – Dec. 18), with the three biggest "losers" receiving $50 American Express gift cards. Twenty-three employees participated.
Executives also learn about their own health by participating in the programs as illustrated by the experience of Ed Waters, vice president of Merit Brass Co. The 240-employee manufacturer of stainless steel, brass, chrome-plated brass and aluminum pipe nipples has participated in the ERC Health (51-plus) program for four years.
What Waters learned from his health risk assessment and his company's health fair led him to make healthier choices with the help of a "wellness coach" from Solon-based WellCorp, an ERC Health partner.
"I used to be part of the crowd that thought little sleep was the right way to get everything done," says Waters. "Now I understand that if you sleep at least seven hours a night, you will be healthier, more productive and are likely to live longer." Waters says he also now exercises three or four times weekly, eats better and drinks plenty of water.
The 50 year old recently put his lifestyle changes to the test and climbed the 103-floor Sears Tower in the "Go Vertical Chicago" fundraiser for the Damon Runyon Cancer Research Foundation.
To what extent other organizations will follow the ERC lead remains to be seen. Still, the recent passage (2006) of Ohio Senate Bill 5 opens the door wide for associations to form health-care alliances for their members, and insurance carriers to segregate that pool of business from their normal pool of business and rate it accordingly.
"Senate Bill 5 allows us to take into account the ERC Health Academy programs and success, and rate it more aggressively than other small groups," explains Tom Sullivan, COO of United Healthcare.
"Programs like ERC's remain relatively unique to Ohio," says Klonk, who, in addition to the two ERC Health consortiums, helped form another in 2003 for educators — the Independent Schools Benefits Consortium (underwriter: United Healthcare), comprised of 40 schools representing 2,500 employees.
The intent of the consortiums, says Klonk, is to make incentive-driven health care available to as many employees in as many industries as possible, whether it's through consortiums based on size or alliances based on one's career.
"There is much commonality when it comes to the health-care needs of employers of a certain size that can be effectively addressed by efforts such as ERC Health," says Klonk. "There are also distinct differences when it comes to certain organizations. Schools, for example, have unique circumstances when it comes to employees, salaries and the way the schools are structured. We find that it helps them tremendously to be part of a pool of like employers."
University School in Shaker Heights has been a part of the Independent Schools Benefits Consortium since its inception in 2003 and has benefited greatly from it, says David Wright, finance director at the school.
"Before we were in the consortium, we offered one basic plan," says Wright. "Now we're able to offer four plans, including a HSA (health savings account) plan. If you look at our lowest deductible plan over the last four years, the average increase has been under 10 percent."
The school can offer more programs because it's protected by the aggregate renewal numbers of the consortium. "In other words, a few high claims won't hurt the larger number in the group, but a few high claims would hurt us greatly if we were on our own," Wright says. "Further, if our claims increase slightly or decrease we benefit because our renewal numbers are based on our school's experience."
In the future, nearly everyone will benefit from incentive-driven consortiums and alliances if given the opportunity to participate, according to Klonk. As for the question of universal health care, Klonk's answer is direct.
"I believe in universal access for all," he says. "But when you look at other countries that have so-called universal health-care programs and you look at the problems their citizens are facing when it comes to accessing such systems, you realize it's not the right answer for us."
Klonk continues, "We will not wait around for the government to figure out a way to mess this up, while our customers and their employees are faced with the health-care issues of today. These programs are working, and they will continue to get better and stronger."