Health care costs continue to rise substantially faster than inflation and
wages. In fact, they now account for 16 percent of the nation’s economic output.
There are a number of factors behind the
soaring costs, but so far, few solutions.
As a result, many businesses have struggled to maintain the level of health care
benefits that they’ve provided in the past.
While the increased premiums are hard to
avoid, steps can be taken to mitigate health
insurance costs.
Perhaps the best strategy, says Stephen J.
Peck, president of Kapnick Insurance
Group’s Benefits Division, is educating
employees about how they can best use
their programs. “Employee communication and education is critical,” he explains.
Smart Business spoke with Peck about
why health care costs have risen, steps to
help control mounting insurance costs and
the importance of open communication
and employee education.
What are some of the factors behind the rising costs of health care?
The obvious factor is that we’re all getting older, and the older we get, the
greater the need for health care. These
needs are being filled with wonderful new
advancements in medical technology and
pharmaceuticals, but each of these
advancements, generally speaking, is
more expensive than what it replaced.
Other factors that contribute to the rising costs of health care are the impact of
the uninsured and underinsured, the cost
of malpractice insurance, hospitals and
physicians practicing medicine defensively, and inefficiencies in the health care
system. The lifestyle choices that we
make like sedentary lifestyles, poor diets,
smoking, not wearing seatbelts and drinking too much also play a large role in the
escalating costs.
What strategies can be implemented by businesses to help control health insurance
costs?
Businesses have to start looking beyond
just cost shifting to employees and downsizing benefits. They have to start addressing — and, more importantly, impacting
— how their employees use health care
programs. If an employer can decrease
the utilization of its health care program,
then costs will ultimately fall.
A number of employers are addressing
employee lifestyle choices through education, implementing health risk appraisals,
wellness programs and disease management programs.
How should an employer communicate with
employees about health care plans?
First and foremost, if an employer is making any plan design changes, it needs to be
open and honest in its communication.
This is crucial for a change to be successful
and for employees to embrace the change.
Employees are very adept at seeing
through any type of smoke and mirrors
that an employer might be putting out
there.
Beyond that, employees need to
understand what benefits they do have
in order for them to effectively use the
resources available. To achieve this
familiarity, many employers are looking
beyond employee communication at
open enrollment and implementing a multi-pronged education program that
touches employees throughout the year.
Some of the methods include ‘lunch-and-learns,’ employee newsletters, spousal
meetings (as opposed to just employee
meetings), posters and payroll stuffers.
Why is it important to provide employee education so they know how to best use their programs?
Most employees get their benefit information at open enrollment. But that’s the
last time they really look at that information. It sits in their inbox or in a folder
somewhere. There needs to be ongoing
education and ongoing information distributed to employees. A great example is providing employees with the information of
the generic equivalents available to substitute for brand-name prescription drugs. It
is important that employees are aware of
what their benefits are so they can use and
access their plans in the most efficient way
possible.
What is your forecast for health care costs?
All indications are that there will be no
significant decreases in health care costs in
the next couple of years. I wish I had a
crystal ball to answer this question more
completely, but that is about as far as anyone can really look into the future.
If employers and employees can work
together to positively impact utilization
through lifestyle choices, disease management and health management programs,
then hopefully this strategy will work to
create a downward trend in costs.
Employers need to properly motivate and
incentivize employees to make healthy
choices, and employees have to realize the
impact — both positive and negative — of
their lifestyle choices.
STEPHEN J. PECK is president of Kapnick Benefit Services.
Reach him at [email protected] or (888) 263-4656 ext.
1147.