Employer Healthcare Costs Continue To Rise

Tuesday, August 31st, 2004
This post was written by Melanie Matthews

Employers are facing continued double-digit increases in health care costs in 2005 and likely will require their workers to pay an even greater share of the bill, according to a new survey of more than 900 firms.

The survey, released August 26 by Mercer Human Resource Consulting, found that employers expect health care costs to rise 12.9 percent on average next year if they leave benefits unchanged.

Meawhile, payor are continuing to look at a number of strategies to control these costs and improve quality, such as disease management, consumer driven healthcare, pay for performance programs.

These strategies are being met with resistance from employees. The 2004 Health Care Consumerism Survey: Aligning Employer and Employee Interests shows a widening gap between employers and employees in terms of attitudes about health care, creating even greater challenges for employers who want and need to enlist employees as consumer allies in the fight against rising costs.

The gaps that need to be closed include:

Issue: Goals
Employers View: Employers tend to focus on the company’s interest in dealing with changes to health programs and to underscore financial concerns, both financial and emotional.
Employee View: Employees focus on their own self-interest when it comes to health care.
Solution: Successful employee outreach must include both elements.

Issue: Healthcare Consumerism:
Employers View: Employers generally don’t feel employees are strong health care consumers, making thoughtful decisions about when to seek care, the choice of provider, etc.
Employee View: Employees overwhelmingly feel they are already good consumers.
Solution: This split may reflect differences in important areas such as how to explore alternative treatments and whether the financial consideration is based on the total cost or the employee’s out-of-pocket cost.

Issue: Controlling Healthcare Costs
Employer View: Employers have typically tried to control health care costs through higher premiums, copayments and other cost-shifting measures.
Employee View: Employees, however, are increasingly resistant to such increases and even doubt they are necessary for business reasons.
Solution: This difference, which ties back to the need to appeal to employees on
more than a pure financial basis, has been fueling increased resistance to health care program changes and impeding the success of employer efforts.

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One Response to “Employer Healthcare Costs Continue To Rise”

  1. Thomas N. Campbell says:

    It’s going to be hard for the insurance, pharmaceutical, medical, and legislative monopoly to hold onto the facade that they provide the right approach to health care, esp since their system has vaulted MDs into the leading cause of death (See “Death by Medicine” by Gary Null et al online). 900,000 are unnecessarily dead each year from this system; that’s over 2400 a day (Iraq is 2.1 US soldiers dead per day). Null’s study is not the only one that exposes medical-performance shortcomings (See JAMA Vol 279(15) p1200 and the Barbara Starfield, MD, study in JAMA 2000. Or you could just read “Who’s Representing the Healthy? by me and get all those studies in one place.)
    As a CEO on Ron Insana’s CNBC roundtable discussion pointed out recently, “At the bottom line, we need fewer people going to doctors, if we plan to control costs.” That means having healthier people. What motivates people to be healthy? Does free insurance provide motivation? Such an approach is more likely to produce a tax increase to pay for the “free” insurance.
    Rather than resort to socialism to attempt to repair our health-care problems, it might be worth asking if our current system provides incentives for good performance or disincentives for poor performance. It doesn’t; everbody in the group pays the same premium. Group-health plans dump the poor-performance cost overruns onto the employer, the government and worst of all, onto the healthy policyholders, who pay a large portion of the premiums for those who fail to maintain their own bodies. Who is that motivating, and why do we punish our top performers?
    Capitalism can fix the health-care problem by offering healthy people their own insurance. Such a plan will drive costs up for poor performers who will be encouraged to get healthier to acheive lower premiums. Such a plan is akin to pay-for-performance. Imagine the effort people might make if their premium was linked to their measured state of health.
    Corporations can go one step further by training and assisting their employees to learn and perform to higher standards.
    Best regards,
    Dr. Thomas N. Campbell, DC