The current economic recession has taken a toll on the health care industry. About 4 million people will lose their employer-based health care due to the tough economy, and many employers are shifting more and more health care costs to employees or limiting coverage offerings. Some are even dropping coverage altogether.
But even with these impacts, health insurance utilization is up. People are afraid of losing their benefits due to layoffs, so they’re getting more care now in case they cannot afford it down the road. The recent H1N1 outbreak has also caused an increase in utilization and physician visits.
“As utilization increases, premiums may continue to rise,” says Greg Fischer, senior vice president of sales and marketing at AvMed Health Plans. “Employers, working with their health plans, agents, consultants and other partners, need to reduce utilization and ensure the members are receiving care at the best possible place of service.”
Smart Business spoke with Fischer about the impact of health care cost shifts and how to stretch your health care dollars.
What trends are happening in the health care industry due to the recession?
Employers are more interested in plan designs that allow them to share costs with employees, such as higher deductible plans. They are increasing co-pays or limiting offerings, such as not covering dependents or increasing the cost share if dependents are covered. Employers are also shifting additional premiums to employees and making the employee contribution higher. This cost shift has caused a drop in membership, as employees who were previously enrolled may not be able to afford the new premiums.
While many smaller companies are dropping coverage altogether, most large groups are trying to provide coverage for as long as possible. It’s still a good recruitment and retention tool, but it’s becoming more difficult to offer standard benefits with low deductible offerings.
While utilization is up, many people with high deductible plans or large co-pays are postponing preventive care or compliance with drug maintenance programs. For example, someone with diabetes may not take his or her insulin regularly, or someone with high cholesterol or high blood pressure may not take his or her maintenance medication. These scenarios can have a negative impact on future health care services.
What impact does the shifting of health care costs to employees have on health care?
There are fewer plan options for employees, as groups struggle to come up with the plans necessary to run their own businesses. Employees may not be able to afford increased deductibles, and there is also the problem of employees putting off services, or not getting services at the appropriate place of care — for example, the emergency room instead of their primary care physician.