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Published in U.S. 1 Newspaper on May 17, 2000. All rights reserved.
Healthcare Prognosis: Expensive and Rising
Hand us the bill and most of us will think twice before
we go to the doctor. But under the current system of healthcare, employees
are unaware just how expensive healthcare really is, says Uwe Reinhardt,
professor of political economy at Princeton University and an expert
in healthcare analysis. "Both the health care provider and the
patient loved the open-ended system because they did not know that
they were paying for it — they thought the company would pay for
it," says Reinhardt. "They went along blissfully not knowing
that their paychecks were melting away. The employer-based contract
had given the health care system a first claim on the paycheck of
American workers, even before the IRS could get to it."
Despite the fact that it’s costly, however, many employers are now
offering healthcare plans that allow employees to pick and chose their
providers in order to attract talent in a tight labor market, says
Reinhardt, who speaks on healthcare issues at "2001: A Business
Odyssey: NJ Business Conference," on Thursday, May 18, at 8 a.m.
at the East Brunswick Hilton. Other featured speakers include William
McDonough, president and CEO of the Federal Reserve Bank of New
York; Susan Bostrom, senior vice president of Cisco Systems,
and Michael Bonsignore, CEO of Honeywell. Call 973-673-5790
A native of Germany, Reinhardt earned a degree in business from the
University of Sasketchewan, Class of 1964, received his PhD in economics
at Yale, and later conducted several study panels, among them the
Committee on the Implications of For Profit Medicine. He has also
served on numerous government committees addressing healthcare, and
was most recently appointed to the Board of Health Care Services at
the Institute of Medicine and as Commissioner of the Kaiser Commission
on Medicaid and the Uninsured. He has taught at Princeton since 1968.
With the recent backlash against HMOs, some businesses are returning
to more luxurious health plans in order to attract employees in a
tight labor market, says Reinhardt. Ultimately, that will send
healthcare costs soaring. "I believe that a health insurance system
that makes health insurance part of the labor contract makes it extremely
difficult to control health spending when the labor market is tight,
and that is particularly so if employees are kept ignorant of the
fact that premiums are taken out of their paycheck," he says.
"That’s why you see premiums go up."
The alternative is for employers to get out of the healthcare system
altogether, says Reinhardt, and let employees pay their own premiums.
"I believe that employers will want to get out of this messy sector
and do like businesses do in other nations, which is collect the premium
at payroll, but not otherwise manage anything — like Germany,
France, Latin America — all the socialized countries," he
says. "My hunch is that the insurance industry will eventually
say, look, if you don’t want us to handle manage care, we won’t. You
need us one way or the other to pay the bills, we know how to do that,
and maybe we can become information brokers, because we know a lot
about doctors in hospitals. So they are reincarnating themselves as
bill payers and information brokers, and less and less as managers
But as long as boomtimes are here, says Reinhardt, businesses are
more or less going to stick with the system that it has. "I think
you will see premiums rise in double digits, 12 percent perhaps, and
neither businesses nor employees, who really don’t care, can do much
Employer-sponsored health benefits may be costly, says
Sherry Glied, former economic advisor to the Bush and Clinton
Administrations, but they are still much less expensive than purchasing
health insurance plans on the open market.
"Employers might say here’s a chunk of money, go out and by yourself
health insurance, but I’m very skeptical that this will happen,"
she says. "Even though it’s a hot idea, I’m cold on it. There
are many reasons that employers are in the business of providing health
insurance to employees. For one, most employees want it, and it’s
much cheaper to buy it through employers than on the open market.
As long as the employees want to get health insurance benefits, and
employers can provide it cheaply, it’s going to be a match."
Glied speaks at the Tribus Companies’ seminar, "The Future of
Employer-Sponsored Health Benefits," on Thursday, May 18, at 8:30
a.m. at the Sheraton at Woodbridge Place, 515 Route 1 South, Iselin.
Call 800-726-1989, extension 2549.
A senior economist for health care and labor market policy for the
President’s Council of Economic Advisers under both Bush and Clinton,
Glied holds a B.A. in economics from Yale University and a Ph.D. in
economics from Harvard University. In addition to receiving the Robert
Wood Johnson Investigator Award for her studies on the U.S. employer-based
health insurance system, Glied also wrote a comprehensive book on
healthcare reform entitled "Chronic Condition" (Harvard University
Press, 1998). She is currently head of the health policy and management
division at Columbia’s school for public health.
Employer-sponsored health benefits may not be cheap, but individual
health insurance plans can be nearly 40 percent more expensive, says
Glied. "People gripe about the premiums they pay with their employer
coverage, but it’s much less than if they went out on to the open
market," says Glied. "When you sell on the individual market,
you face the risk of selection — people who are sicker are more
likely to buy on the open market."
Another reason employer-sponsored benefits are favored is that it’s
one less arduous administrative task for people to deal with, says
Glied. "Some surveys suggest that people are very happy that employers
are selecting their insurance for them," she says. "Human
resources handles a lot of work that the individual would otherwise
have to do."
Although managed care has been attacked on the grounds that it prohibits
patients’ freedom of choice and lacks quality, says Glied, a closer
look at managed care shows that many people are in fact happy with
the system. "Employees generally choose the managed care plan,"
she says. "All the evidence suggests that employers take quality
into account just as much as employees."
The rising costs of healthcare, says Glied, might be explained by
the fact that people are actually willing to spend more on healthcare
if they get more out of it. "People actually want to spend more
on healthcare," says Glied. "That sounds strange, but people
are wealthier than they were 10 years ago, and they’re saying `I’m
willing to pay a little bit more to see the doctor I want.’ That’s
why managed care plans are offering two-tier plans that let them go
out on their own."
"The thing that drives healthcare costs," says Glied, "is
the development of new technologies, new pharmaceuticals, and unless
we don’t want to see that, we’re going to have to pay for new stuff."
— Melinda Sherwood
Setting a record pace, the Small Business Administration
(SBA) of New Jersey approved 873 loans for $200 million to New Jersey
small businesses during the first six months of fiscal year 2000 —
a 31 percent increase over last year’s 666 loans, according to SBA
In Mercer County alone, the SBA approved 37 loans for a total of $8.6
million between October and March. "Instead of being a passive
agency we’re being proactive in taking the programs to the community,"
says Harry Menta, public affairs specialist at the SBA in Newark.
On Thursday, May 18, at 9 a.m. the SBA sponsors a Business Financing
Expo at Mercer County College, with MCCC’s Small Business Development
Center and the Service Corps of Retired Executives giving one-hour
presentations on their services and local lenders reviewing business
plans and offering applications. Call the SBA at 973-645-6064.
The Trenton Business Assistance Program, a micro-loan lender serving
four counties including Mercer, will also be in attendance to discuss
its loans for $25,000 or under.
Loans to minority-owned businesses nearly doubled in the first six
months of fiscal year 2000, according to SBA statistics. African Americans
received 56 loans, totaling $4.6 million, up from 25 loans in the
first six months of 1999. Asian Americans received 136 loans for $40.3
million, up from 87 for $26 million in the same period of 1999. Although
the number of loans to Hispanic American businesses increased, the
total amount of the loans — $6.4 million — dropped slightly
from last year. Accordingly, the SBA has decided that Hispanic-owned
businesses are a priority this year. "I believe we could be doing
much more for the Hispanic business community," said Francisco
A. Marrero, director of the NJSBA, in a press release. "We
need to be working more closely with organizations like the Statewide
Hispanic Chamber of Commerce and other Latino business groups, as
well as our lending partners to help us identify Hispanic business
owners who can utilize the SBA’s programs and services."
Tuesday, May 23
Not long ago employers believed all E-mail correspondences
conducted over the company network were property of the company, but
today the courts are siding differently, says Elaine Jacoby,
an attorney with Duane, Morris & Hecksher LLP, with a Princeton office
at 116 Village Boulevard. "We’re seeing cases filed involving
employee rights to their E-mail that federal and state statutes may
very well protect," says Jacoby, who conducts a workshop on "Piracy
and Privacy" on Tuesday, May 23, at 8:30 a.m. at the Princeton
Marriott. Call 609-734-4324.
The issues of piracy and privacy dovetail, says Jacoby, a 1963 graduate
of Mount Holyoke College, because the way in which employers maintain
security may impinge on employees’ rights to privacy protected by
law. "Employers have a legitimate reason in many instances to
want to monitor what employees are doing and prevent violations of
the law, but at the same time there is concern by employees that legitimate
personal communications will be interfered with," says Jacoby.
Although an employer does have the right to monitor employee productivity
and efficiency, which may in fact involve the monitoring of E-mail,
personal medical information is protected under the Americans with
Disabilities Act, and legitimate personal communications via E-mail
are protected under the Electronic Communications Privacy Act and
under common law concepts of invasion of privacy. "When I say
personal interest, I mean a legitimate personal interest having to
do with one’s family or one’s health," says Jacoby.
Although the law is not set in stone, employers can prevent confusion
by telling employees that the computer system belongs to the employer
and let them know the extent to which they will be monitored, says
Jacoby. "If they don’t give notice up front," she says, "then
they have created the expectation that their E-mail is private, in
which case if they monitor it they may be subject to claims of invasion
Wednesday, May 24
Business favors diversity, says Virginia Ibarra,
executive vice president of cultural diversity at Summit Bancorp.
"In the year 2020, one-third of America will be comprised of African-American,
Asian American, and Hispanic-American people," she says. "At
this point the combined spending power of people of color is approximately
$1 trillion — that’s equal to the sixth largest economy in the
world. Companies are going to want to pay attention to that customer
base. They need to pay attention to their staffing internally to help
them understand and serve those customers."
Workforce diversity will be the focus of the next National Conference
for Community and Justice on Wednesday, May 24, at 8:30 a.m. at the
Merrill Lynch Corporate Training Facility at 800 Scudders Mill Road.
Ibarra and Patricia M. Harris, vice president and manager of
cultural/diversity training at Merrill Lynch, will both present their
company’s strategy for fostering workplace diversity. Katherine
Kish, chair of the Princeton Chamber, Diane Procaccini, vice president
of Merrill Lynch Bank USA, and Diane Schwartz, executive director
of the National Conference for Community and Justice New Jersey, will
welcome and introduce both speakers. Call 732-745-9419.
The National Conference for Community and Justice was founded in 1927
as a human relations organization dedicated to fighting bias, bigotry
and racism in America. It conducts programs and provides forums for
young people and adults, taking its message to schools, houses of
worship, community, and the workplace. "For years we talked about
the goals and the initiatives of becoming a more diverse and inclusive
society," says Ibarra, an 18-year veteran of Summit. "There’s
still a lot of work that needs to be done, and taking the business
approach has helped move that forward more quickly."
Summit’s workplace diversity program, established three years ago,
aims to bring more minorities into the workplace where they can inform
and enlighten the company and bring more minority customers into the
fold. "The percentage of potential customers and growth for Summit
is dependent on providing customers in the minority or under-served
market," says Ibarra. "We already have diversity, it’s about
being inclusive. If we had been successful in other initiatives to
give people access to jobs, services, and what the economy has to
offer, we would not need a diversity office. Obviously this is about
a continued lack of opportunity."
Ibarra has modeled Summit’s diversity program after those of well-respected
companies like Xerox, Avon, and Johnson & Johnson. "There are
three points you have to focus on when you want to change the culture
of your program," she says:
a proactive approach to being more inclusive. "It has to be communicated
to and understood by everybody in the company," says Ibarra.
program, or a program of the month, but an initiative that will be
integrated into the fabric of the company.
how to do business that have to change, says Ibarra, but it’s a win-win
proposition. "As we have paid more attention to issues that women
are concerned about, for example, we have improved and humanized our
workplace in general, by addressing things that women are interested
in, such as child care, flexible work schedules," she says.
The challenge of workplace diversity, she says, is to "find ways
that are positive and good for the company and good for the employees
to make the workplace a better place to be."
— Melinda Sherwood
The people who participate in a community association
— for a condo, a co-op, a group of townhouses, a home owner group,
or planned unit development — are used to running a business and
want to keep track of where the assessments are going, says Lynn
Lobas of Community Association Institute (CAI). "It has been
proven that good communications is necessary for harmony. It keeps
all the residents on the same page — who maintains the lawn and
who maintains the snow."
Lobas is executive director of CAI at 1230 Parkway Avenue, Suite 305,
West Trenton 08628. On Wednesday, May 24, at 6:30 p.m. at the Woodbridge
Sheraton, Stark & Stark attorney Thomas Pryor will chair a panel
on getting community association communications up to date — putting
them on the Web. Talking about "The Virtual Community," effective
use of E-mail and website development, will be Albert Clark
of Community-Path.com, Scott Flood of iballot.com, and Kevin
Hersh of mfx Inc. Cost: $75. Call 609-882-3223 or fax 609-882-3733.
Lobas grew up in Morris County, went to Ohio University, Class of
1973, and has had this job for 20 years, ever since CAI was founded
by Woodbridge attorney Wendell Smith. "I took it on when it had
89 members and now we are 1,200 members," says Lobas.
CAI is a chapter of the national association based in Alexandria,
Virginia and is the second largest chapter in the country, second
only to Washington Metro. "New Jersey has a lot of community association
properties. Because we have been in existence for over 20 years, we
have been quite diligent in inviting new members," says Lobas.
A community association can be anything more than two or three units,
according to the definition supplied by the state department of community
affairs. Including the small condos at beach resorts that probably
means the state has from 2,000 to 2,200 associations. Condos started
being built in 1970s and laws were just going on the books. Now industry
trends are moving to adult communities and assisted living communities
In spite of intensive recruitment Lobas estimates that CAI has just
30 percent of the eligible members in New Jersey:. "We hear all
the time that people don’t even know we are available."
Thursday, May 25
Non-profit organizations are just beginning to discover
the money-raising potential of the Web — that is, how developing
a strong website and nurturing a virtual community of givers can be
a vital element of the fundraising process. Some non-profits like
the Red Cross already have a strong Internet presence and vehicle
for online fundraising. But the real value of the Internet is its
ability to reach out to new people and communities, says Laura
Blanchard, an electronic publishing specialist at the University
of Pennsylvania. "At this point the issue of friendraising is
as important as the issue of fundraising," says Blanchard. "For
non-profits, large gifts online are going to happen, but what the
Web can do is help us expand our communication with key constituencies."
And a smart, exciting, and cutting edge website means tapping non-traditional
constituencies as well. At the University of Pennsylvania library,
for example, fundraisers have been able to capture the attention of
technophiles as well as bibliophiles, says Blanchard, who speaks on
"Fundraising and Friendraising on the Web," on Thursday, May
25, at noon at the Women in Development meeting at Peddie School’s
Coates Coleman House. Call 609-895-5775. The meeting is open only
to members and their guests.
A executive director of the Philadelphia Area Consortium of Special
Collections Libraries, Blanchard was approached by the American Library
Association to write a book on the Internet’s impact on non-profits
and on library fundraising in particular. Co-authored by Adam Corson-Finnerty,
the book, "Fundraising and Friendraising on the Web" (1998,
ALA) covers everything from building a cyber-community to the nuts
and bolts of website design (a "donate here" button).
You can read select chapters of the book at www.fund-online.com,
a site that Blanchard and Corson-Finnerty jointly developed for the
non-profit community — libraries, universities, disaster and relief
organizations, charities, and social change organizations — with
useful links, seminar schedules, and "musings" that bring
discussions of the Internet and fundraising up-to-date. "The
book is two years old, which is 14 years old in Internet years, that’s
why we negotiated with our publisher to put a large portion of it
online," says Blanchard. "It was outdated the moment it came
off the press. All of it is fairly good information, but a lot more
is happening today."
One musing entitled, "Does Old Ivy Have An E-Strategy," written
by Corson-Finnerty, examines the struggle going on within academe
to use technology to enhance the school’s educational mission, which
would bring education to a whole new customer base, while at the same
time remaining true to its elitist, ivory tower instincts. "Cybergifts"
explores most well-received web fundraising tactics — the vices
and virtues of spam, for example.
Since most non-profit institutions are still in the process of implementing
their website, however, Blanchard and Corson-Finnerty’s book gives
these reasons to get online:
a global audience.
in interactivity so that your site becomes an "event" in its
likes to see their face online, so imagine a site that rewards its
major donors in a cyber gallery.
online mechanism for making online credit card donations, a "no
fuss, no muss" way for people to support their favorite charity
or alma mater. The next step is being creative about it, says Blanchard,
who cites CyberCoin.com, where children create and display online
art work and purchases of art are donated to Make-A-Wish Foundation.
Before going interactive, however, start with the basics, says Blanchard.
Let your audience know what you are about and what they can do to
If you are in charge of the data center and infrastructure
at a company like Bristol-Myers Squibb, Lucent, or Bell Atlantic —
and if you want to sleep at night — you have made darn sure to
have triple backups in place to protect your data 24 hours a day,
seven days a week.
There’s a trade group for everything, and there’s a trade group for
this too. It used to be called the Uninterruptible Uptime Users Group,
and now it is known as the 7×24 Exchange, a knowledge exchange for
those who design, build, use, and maintain mission-critical enterprise
information infrastructures. It aims to improve end-to-end reliability
by encouraging these groups to talk to each other.
A new chapter, the seventh in the nation, will meet for the first
time on Thursday, May 25, at 5:30 p.m. at SAP America’s headquarters
in West Chester, Pennsylvania. Membership packages will be handed
out at this kick-off meeting and will be mailed to prospective members
in June. For information call Russ Mykytyn, executive director,
at 215-826-1168 (www.7x24Exchange.org).
Exchange of information among the leading companies that live in a
7×24 world is critical, says Phil Davis, the inaugural president
and project manager of facility operations for MBNA. "Even though
the majority of the Fortune 500 companies have highly sophisticated,
high availability infrastructures already in place, there are hundreds
if not thousands of companies that can benefit by having the opportunity
to exchange experiences in a non-sales, professional setting."
Quarterly meetings will be held at high profile facilities in order
to attract both IT and facility people from a broad range of companies.
Programs will be educational, structured, yet informal, and vendors
will be encouraged to "add value through their involvement"
but are forbidden to do direct or overt selling at the meetings.
of the group. Maurer is facilities and engineering manager of BMS
Hopewell Data Center, chairman of the BMS technology reliability committee,
and senior electrical engineer for global operations of BMS.
Companies represented on the board with regional offices in Princeton
include Gilbane at Princeton Crossroads Corporate Center and Bala
Consulting on Clarksville Road. Other founding members include SAP
America, the Vanguard Group, Penn Power, DuPont, Bell Atlantic, SunGuard,
PNC Bank, First Union Bank, Wyeth-Ayerst, and Lucent Technologies.
The executive director, Mykytyn, is formerly a partner with Clarksville
Road-based Creative Marketing Alliance and is now vice president of
strategic marketing at DVL Inc. and DVL Automation, a high availability
systems integration firm in Bristol, Pennsylvania.
The new 7×24 Exchange Delaware Valley Chapter hopes to become an active
one. "We have the key people in our market who have built and
run some of the most critical, high availability infrastructures in
the country, and are willing to share their experiences with new members,"
a golf invitational for the New Jersey Organ and Tissue Sharing Network
(The Sharing Network) but other sponsors are also needed. Registration
for the four-person scramble tournament will be Thursday, June 22,
at 11 a.m. at Fiddler’s Elbow Country Club in Bedminster.
that recovers organs and tissue for transplant in New Jersey. Players
have the chance to win a 2000 Lincoln LS and a cruise to Tahiti. Jay
Golden , trick shot artist and comedian, will entertain, and Rick
Cerone, former New York Yankees catcher and now owner of the Newark
minor league baseball team, will be a celebrity player. Call Gary
Johnson at 973-331-1070 or 800-SHARE-NJ, extension 3450.
Turn the daily commute into a wonderful bike ride through the countryside
on Friday, May 19, National Bike To Work Day.
In Somerset County, RideWise, a non-profit advocating alternate commuting
choices, will offer participating cyclists prizes for, among other
things, completing the longest commute, or the company with the most
participating employees. Call RideWise at 908-704-1011.
The search is on for New Jersey’s Family Businesses of The Year,
sponsored by PNC Bank, the Rothman Institute of Entrepreneurial Studies,
and New Jersey Monthly. Nominations will be accepted until June 1.
To be eligible, a business must include, or have included, more than
one generation. To request a nomination form, call 973-993-5600.
Corrections or additions?
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