To the Editor:

We are now into the new millennium, and the world keeps turning just as it always did.

However, the employee benefits world of the new millennium looks like it is going to be marked by even more rapid change than what we have seen over the last 20 years. Some of the issues we face in our banks are going to cost us dearly in cash, time, and other valuable resources. While no one has a crystal ball, some things do appear sufficiently preordained to be items we can discuss and begin to plan for.

Perhaps the most pressing problem, not only for bankers but for all employers, is the increasing cost of providing medical benefits to our work force. Not since the early 1990s have we witnessed the increases in costs that we are seeing today. It is not uncommon to hear of rate increases of 20%, 30%, 40%, or even more.

What is so difficult to accept is that the experts predict the trend is here to stay for the foreseeable future. At some point, the cost of this benefit may become totally prohibitive for many employers. Yet it is the benefit most in demand by the work force, so in order to remain competitive we have to address it in a way that is at least generally acceptable to our employees. In a full-employment economy, recruitment and retention issues will be important factors in how we respond to the increasing cost.

Baby boomers are he most important part of today's work force. They are trained, looking for employment security as they approach retirement, and because of age and health risk will be the most expensive covered group in our medical benefits plan.

To a very large extent, this population believes that they have a right to medical benefits through their employers. They also tend to believe that they bear no responsibility to maintain good health practices in order to contain costs and enhance productivity.

Many new programs are coming on the scene to help manage the costs of the chronically ill who suffer from diseases such as diabetes and heart disease. While these are valuable programs, they do not address the issue of how we encourage the general working-age population to stay away from diseases brought on by self-destructive behavior (lack of exercise, poor diet, smoking, etc.) that accounts, some experts say, for as much as 70% of our medical care bill.

Creative programs focused on health promotion and disease prevention will become an integral part of our plan designs.

One of the strategies being proposed in various quarters to limit the employer's liability for increasing premium costs is what are known as "defined contribution" plans. The intent is to put premium contributions in the hands of the employees and expect them to buy the best coverage for themselves and their families.

Sounds good, but current tax law is a problem. Many communities may not have the necessary competing health insurance carriers to support the program, and we will have to provide a tremendous amount of employee training and communication to make sure that correct decisions are being made.

It remains to be seen if the concept can be packaged in a way that makes it understandable to the employee so that we do not have more people with inadequate coverage when they need it.

Perhaps one of the most promising aspects of the new benefits world, as it relates to performing administrative tasks and disseminating valuable information to employees about their benefits and their health, is the Internet.

Many companies are offering innovative and exciting programs over the Web that can help people learn how to properly access medical care for themselves, to avoid unnecessary illness and costs, and thus protect their quality of life.

Rann Paynter
Vice president, community bank services
North Carolina Bankers
Association Raleigh

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