2. What results in terms of cost reduction do you anticipate Polson will achieve through the implementation of its new health-care program?

In the spring of 2006, Ron McGee, vice president of group insurance and labor relations at Polson Corporation, delivered the bad news to top management. Medical-insurance premiums for the following fiscal year were expected to increase approximately 20 percent, up dramatically from the 8 percent increase of the previous year—and future cost projections were equally grim. It was estimated that by 2010, the company’s $555 million annual health-care bill would increase to a staggering $813 million.
Polson is a large, high-technology, automotive and electronics products company that employs about 70,000 people in the United States. The company decided not to tinker with traditional remedies to escalating health-care costs, such as increasing deductibles and shifting larger copayments to employees. Instead, it turned to managed health care. It did so by contracting with Whitefish Corporation, a large employeebenefits company specializing in such managed health-care plans.
A task force was formed in 2006 under the direction of McGee. The task force included HR executives from the corporate office of Polson in Morristown, New Jersey.
This group was given the challenge of developing a custom-designed program that would hold down health-care premium costs to a reasonable level.