New visions for fixing health care

When Tim Godzich talks about the launching of his new software company, he likes to kick things off with a history lesson: "Many of today's health insurance plans offered by employers are 1945 relics of wage-price control," he says. "The majority of those offered health care plans were males, who were perhaps married with a family, and they probably worked for one company their entire life. Today, with the diversity of people, companies can't create just one benefits program that meets everyone's needs."

Godzich's startup, Liazon, helps employees of small companies choose their own benefits, health, and protection plans from a bigger pool of insurance options. Liazon has formed partnerships with more than 40 insurance corporations throughout the U.S., and its service is sold to small companies via firms that sell payroll software and 401(k) options, as well as through local chambers of commerce.

Here's how Liazon works: The employer decides how much money it will allot per employee for the year for benefits. Once that figure is assigned in the software, employees open a Web portal. Its windows look much like those of a personal stock portfolio page. Pie charts illustrate the individual user's benefits package and what percentage of each service - medical, dental, etc. - is being paid by the employer. Without leaving the portal, employees can research and compare the costs of various health insurance options, and automatically calculate how much they would have to pay, out-of-pocket, for any given plan in their region.

"We're trying to bring a Fortune 500 benefits program to smaller employers," says Godzich, whose small business clients pay an annual maintenance fee to run Liazon.

For the past few years, KD Supply, a Buffalo hydraulics power unit manufacturer with 37 employees, watched as the rates of its traditional HMO plan increased by 10% to 12% percent annually. After consulting with Liazon, CEO Kevin Pritchard switched from his HMO to a health savings account (HSA), which immediately reduced his expenses by 31%. And because he can set an exact dollar amount that he will pay to employees for benefits each year, Pritchard says his expenditures will go down at least another 25% in 2009.

"I always felt sort of powerless to sit back and just take the rate increase offered to us by our broker year after year - they never explained to us why the costs went up," says Pritchard. "To work with a middleman like Liazon that tries to save us money rather than passing along costs, it makes life a little easier."

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