It’s no secret that health care costs have risen tremendously in the last decade, leaving employers with higher premiums and their employees with higher out-of-pocket expenses.
The increases have left many employers wondering how to continue to provide health benefits to their employees while controlling costs.
“Most employers have a drawer of issues they’re dealing with, and health care for their associates is extremely important,” says Joseph LaGuardia, regional vice president of sales for Anthem Blue Cross and Blue Shield. “They want their employees to have the best cost for health care that they can afford and the system can deliver.”
A recent report by Anthem entitled “Health Care Costs: Challenges and Solutions” shows that the Medical Consumer Price Index has risen at a rate double or triple that of the Total Consumer Price Index.
But to understand how to combat these rising costs, employers must first understand the causes.
Overutilization
In today’s society, we have become accustomed to consuming whatever it is we need without thinking about the causes and effects of that product or service, and health care is no exception. As a culture, we don’t really evaluate the necessity of the medical care or medications we receive and the effect they have on overall costs.
According to Anthem’s report, from 1992 to 2002, the number of issued prescriptions increased 74 percent compared to a population growth of only 12 percent. The report also said that approximately one-third of the 150 million outpatient prescriptions for antibiotics each year are unnecessary, as are many emergency room visits and tests.
Then there are the innovations in technology and pharmaceuticals, as well as the investments in newer medical facilities, which are great for health care but not for health care costs.
But one of the most overlooked factors in rising health care costs is the human component, says Perry Braun, vice president of sales for Medical Mutual.
“There’s a general theory that as we age as a population, the more health care expense we’re going to incur,” says Braun. “The more that the baby boomers and other pockets of the population age up, more intense need for health care resources are going to be demanded. If we simply eat better, exercise more, pull ourselves away from the television set, we can also impact how much health care (spending) is going on.”
And therein lies the key, he says. Health care companies and employers must find ways to help employees consume fewer health care resources. The solution is to give people the tools to become more aware of their physical condition and embrace healthier habits.
Plan of attack
It’s not enough to just focus on those with chronic diseases, says Braun. Employers now must also focus on the healthy and invest a similar amount of time and energy to maintain their health.
“What I think employers are starting to recognize is, ‘I can’t just invest in people who are sick. I can try to manage that, but what I can do is I can bring a little bit more proactive resources to the people who are healthy to help them understand where they are in their health status today,’” says Braun.
These investments may come in the form of disease management programs and health fairs or other healthy workplace initiatives.
“There’s fitness programs, there’s nutritional programs, there are education programs on reducing chronic conditions like heart disease, diabetes and pulmonary disease,” says Patricia Kennedy-Scott, regional president of Kaiser Permanente of Ohio. “There has to be an environment within the company that encourages (healthy habits). There has to be an environment where people have time to go out and walk during their breaks or lunchtime. Or create a pathway within the office where people can walk. Maybe we’ll have some of our meetings scheduled at 7 o’clock on the treadmill.
“In addition to that, people don’t wake up every morning and say, ‘Gosh, I wonder if I’m having problems with my blood pressure or my cholesterol,’” she says. “Most people don’t undertake having that type of screening unless it’s made available to them and made available to them easy. Employers who bring that type of screening into the workplace on an ongoing basis have a greater likelihood of helping employees who have these diseases.”
Several health care providers also are reaching out to employers to help their workers quit smoking. Medical Mutual has partnered with the Tobacco Use Foundation to provide Nicoderm patches free to its members. It also brings cessation stations on-site to provide information and sign employees up for counseling.
“Your issues may be smoking; a manufacturing company or a service company directly next door to you, their issues might be obesity, and the one next to them might be something completely different,” says Braun. “So it’s important for [us as insurance companies] to be flexible enough to bring the right kinds of resources matched to the need to not only address, again, those things that are driving the costs today, but to manage the rest of the individuals so that they do not become expenses in the future.”
Incentives for change
It’s one thing to provide these resources to your employees; it’s another to get employees to take advantage of them. The most effective strategy, says Braun, seems to be the creation of incentives.
For example, an employer might provide a reduction in contribution to health insurance coverage for individuals who have demonstrated a healthy lifestyle. The amount taken out of their paychecks for health care could vary depending on how many programs they participate in. One option is a sliding scale in which the more healthy the lifestyle they demonstrate, the less money that is taken out of their paychecks.
The incentive may be just the extra push some individuals need to start participating and taking an interest in their own health.
“You could bring Weight Watchers into your worksite, and upon successful completion of the 12, 10, 14-week program — whichever is appropriate — that part of that expense is refunded back to the individual,” says Braun. “But there are other approaches that make equally good sense. You can construct incentive systems around the frequent use of (fitness facilities in general).”
The key is to think outside the box — find initiatives and corresponding incentives that are relative to your employees.
What’s next?
While no one knows for certain what the health care landscape will look like five years or even six months from now, most health care professionals agree that we’re moving toward a more consumer-driven system.
“I think that what we’re going to see more of is a shift by employers away from first-dollar coverage to coverages where there are higher contribution requirements on the part of the employee in the form of co-pays and deductibles and perhaps even co-insurance,” says Kennedy-Scott. “You’ll see employers moving more and more away from providing coverage around chronic diseases and moving to plans that are focused on wellness and healthy lifestyles and emergency or catastrophic type of coverages.
“It’s going to be a requirement that consumers become more astute in their purchasing decisions because as employers back away from providing first-dollar coverage, that’s going to leave a gap. Employees are going to have to get really smart about how they fill that gap,” she says.
This will require health care providers to put information and resources into the hands of consumers to help them make better health care decisions.
“(Employees) should be able to go online as a member and identify at a hospital or a physician what costs what,” says Braun. “So why does an appendectomy cost three times more at one facility than another? Why does an office visit cost 20 percent more from one doctor versus the other when they’re right across the street from each other?
“Should consumers have the information? I think we’d all agree it’s helpful if they have it. [Asking ourselves], ‘What do they do with it now that they have it?’ is how we help consumers within a consumer-directed plan.”
HOW TO REACH: Anthem Blue Cross and Blue Shield, www.anthem.com; Medical Mutual, www.medmutual.com; Kaiser Permanente, www.kaiserpermanente.org
