It is really rather extraordinary when you think of everything that has happened in the world in the last 50 years. The United States, emerging as the only superpower, has defeated communism; the Berlin Wall fell; and most of Europe is joined under the EU banner. Personal computers and cell phones have proliferated to such a degree that it has forever changed how we communicate with each other. Medical technology has achieved such tremendous advances that no longer does a diagnosis of heart disease or cancer automatically mean a death sentence.
So why are health insurance and medical care delivery still stuck in the 1960s? It can’t be that hard to move into the present time, can it? I mean, heck, we have elected presidents simply for the sake of change, why not revamp health insurance?
Sure, we have conjured up devices like drug cards and physician office co-pays, but fundamentally, plans are still the same. The employee waits to get sick, runs to the doctor, and the insurance company pays the bill, sans deductible. And regardless of the good and necessary benefits within the PPACA, it is really little more than a lot of cost shifting and increased taxes.
With a closer and more honest look, we can actually see that health insurance and employee benefits have indeed changed, and we might be somewhat shaken to discover that it’s not the industry that hasn’t changed—it’s the employers.
The goal of employee benefits is the same as it has always been: to attract and retain valued employees. But if employers are going to spend tens of thousands of dollars on benefits, why do they treat these programs like a pariah with bubonic plague?
Health insurance is the second largest non-business expenditure of any employer, behind payroll. It’s expensive for both the employer and employee, yet the employer seemingly sits back and accepts double-digit rate increases, doing little more than tweaking the deductibles and co-pays. There is a lot of grumbling and complaining, but when a rate increase is incurred, the employer simply figures out how to equitably pass along the increase to employees while honing the benefits.
What more can be done? To be perfectly honest, a lot.
Alternate Funded Plans
Within the last 10 years, the industry has seen a multitude of options with regard to alternate funded plans. Health Savings Accounts (HSA) are achieving extraordinary popularity for their flexibility and investment components. A full 13 percent of all U.S. companies now offer some sort of HSA health plan, a number expected to rise to 25 percent by 2015. By structure, the underlying insurance plan is designed to be less costly than traditional health programs.
Employers are investing premium savings into their employees’ HSA accounts and creating an environment of savings and consumerism for the employee. Consumerism will go a long way in helping employees manage their costs—and subsequently, the costs to the plan—by giving them pause before they access the healthcare system. Do they really need to go the emergency room, or would a phone call to a nurse line be the best first step?
Health Reimbursement Arrangements (HRA), which give employers a lot more control of their money, have also become more common. Much like an HSA, HRA monies are designated to the employee, but can be retained if not spent, and can be used to tie an employee to the employer.
Also, self-funding insurance isn’t just for large employers anymore. Small employers are buying high-deductible plans and self-funding between that high deductible an insurance company provides and a much lesser deductible that the employee incurs. A good third-party administrator is needed to handle the day-to-day claims, but employers are saving tens of thousands of dollars with this type of funding.
Finally, ask yourself why you aren’t offering a Flexible Spending Account (FSA) to your employees. The administration for these types of plans is so inexpensive, and the benefits are so significant for the employees, that you become an immediate hero for zero cost. Remember, whatever tax savings they generate, you save the same in matching.
Wellness and Smoking Cessation
All Americans have heard the reports about our societal health issues. We are getting fatter and more sedentary every year. Obesity rates have doubled since 1980 to 30 percent of all adults, and contribute to more than 30 serious diseases and one quarter of all healthcare claims.
So why are employers taking this sitting down? The only way to control your rate increases is to control your claims, and wellness is the answer. Employers have a multitude of options available to them, and the good news is that the best are the low-cost ones. Getting health clubs to provide discount memberships, blood and wellness screenings, and internal wellness committees are highly effective at improving the health of employees.
Online health risk assessments (the other HRA), wellness companies, and company immunizations are other great ideas, and money well spent. Studies routinely show that for every dollar spent on wellness, $4 to $6 is returned.
Smokers, the very biggest health risk on your plan, cost employers, on average, $3,800 per year, according to the latest studies. They are more frequently absent, have greater presenteeism costs, and access your health plan more often. Smoking cessation programs can be designed to help smokers quit (simply don’t let them smoke when they are on the clock), provide support while quitting, and reward them for not smoking.
Think of it statistically. We know that 20 percent of the population smokes, whether you know it or not (studies also tell us that many smokers are “closet” smokers). If you have 100 employees, roughly 20 are smokers. If you can get half to stop smoking, it’s like writing yourself a check for $38,000 each year.
Conclusion
Employers are being taxed by the high costs of healthcare, and with each year, it becomes more and more difficult to absorb those costs. There are a ton of ideas in the marketplace that not only control costs, but invest in your employees and create a culture of concern and aura of altruism.
If the idea is to attract and retain employees with your tens of thousands of benefits dollars, shouldn’t you be doing everything to make certain those dollars are being spent as best they can? iBi
