Rising Healthcare Costs? Your Employees are the Solution
Monday, April 8, 2019
Posted by: Kaylin Berg
Joe Spallina, Vice President of Employee Benefits, Assurance
Newsflash: healthcare costs continue to rise. Wait, that’s old news. Actually, it’s the same news. Healthcare costs continue to rise and employers continue to look for solutions to keep them in check. The good news is the solution’s right in front of your face. It’s your employees. By engaging, educating and incentivizing your employees, you have a realistic chance of positively affecting your healthcare spend.
Contrary to popular belief, the insurance carriers are not the bad guy. Healthcare costs are driven by the consumption of goods and services. If employees never go to the doctor or require prescriptions, guess what, healthcare costs would be effectively zero (there is an element of fixed costs that can’t be avoided). Knowing consumption can never be zero, there’s a lot that can be done to help control costs. Harkening back to my finance days, I try to look at healthcare costs at their most basic elements: rate times volume equals total cost. Thinking in these terms, it’s important to help employees understand that their actions (or inactions) affect both elements.
For example, the volume of healthcare consumption is directly tied to an individual’s health and wellbeing. If an employee is actively engaged in the company’s wellness program, takes proactive steps to care for themselves, watches their weight, doesn’t smoke and sees their physician on an annual basis, we know generally their healthcare costs will be much lower than someone who exercises poor living habits. People engaged in their own health and wellbeing are lower consumers of healthcare. Thus, it’s important to engage your employees in your corporate wellness program and create meaningful financial incentives to affect their behavior positively.
So now that we’ve solved the volume side of our equation, let’s examine the rate side. To be fair, understanding medical costs and pricing is difficult, to say the least. How often have you heard when asking a medical provider how much something costs, “I have no idea, our billing department handles that”? And, when you call the billing department (if you dare), “it depends on what insurance you have.” It kind of feels like you're dealing with the car salesman. It shouldn’t be this hard.
The good news is the industry is coming around and new tools are available to help answer some of those basic questions. The important message here is to educate your employees and let them know they have choices and those choices have a direct impact on the cost of their healthcare. One of the more blatant examples is the cost of a MRI. Many employees don’t realize the cost of a MRI can vary from $3,000 at the local hospital to $800 at the free-standing MRI clinic. Depending on the specific deductible and co-insurance, the decision to go to the free-standing clinic can have a direct, dollar for dollar impact on the employee. It can also have a direct impact on the plan costs and premiums for all. Educating employees on their choices is critical.
So, I guess there’s no newsflash about the rising costs of healthcare. The newsflash is your employees are your solution.