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With the growth of consumer–directed health plans, the health benefits landscape is undergoing a major change. Although the rewards of moving into this new terrain are considerable, employers face the double challenge of not only educating employees on the new benefits, but also working with employees as they become more engaged in making their own health decisions.
The need for new health benefits models is becoming increasingly clear. For several years, employers have been faced with double– digit increases in healthcare insurance. While these growths have leveled off over the past few years, employers still face premium jumps that are triple the rate of inflation. In fact, total U.S. healthcare expenditures are projected to nearly double from $1.9 trillion in 2005 to $3.6 trillion in 2014.
In 2007, companies that want to keep healthcare costs in check will be at the forefront of the Consumer–Engaged Healthcare movement and will help their employees understand that the choices they make can improve their lives, as well as push down costs.
True consumerism – the backbone of the U.S. economy – is seen in every market from cell phone carriers to auto insurance. With access to the latest information on the cost, quality and availability of products, consumers can make choices that help drive down costs and improve product and service offerings.
EDUCATING EMPLOYEES One of the biggest issues for employers is that their workers do not fully understand the investment required to provide health benefits. A study conducted in 2005 by MetLife found that 28 percent of those surveyed believe their employers spend less than $1,000 annually on individual health insurance, and half believe their employers spend less than $2,000.
In reality, companies typically spend an average of $4,260 annually for each employee who requires single coverage and $12,396 annually for each employee who opts for family coverage, according to a 2006 Towers Perrin Health Care Cost survey. With proper education about the cost of health benefits, employees are more likely to appreciate the investments employers make in their behalf.
Employers, HR professionals and insurance brokers can also help employees understand the factors that contribute to skyrocketing healthcare costs. By understanding, employees can make smarter healthcare decisions and recognize the factors that cause employers to struggle to control rising costs. Some of these factors include:
- Inappropriate or unnecessary care, such as visiting the emergency room rather than a primary care physician
- Use of specialty services, such as expensive treatments that were never before available, for illnesses like heart disease, kidney disease and cancer
- The growing use of high–priced equipment even when traditional diagnostic methods will suffice
- “Defensive medicine” practiced by providers concerned about malpractice suits if they do not exhaust all treatment options, even when they are not warranted
DRIVING CONSUMERS In an attempt to holddown costs, many employers require their employees to share some of the healthcare costs – whether by paying for part of the premium, providing a portion of the co–pay or doing a bit of both. Companies hope that by requiring employees to have some “skin in the game,” employees will have a deeper appreciation for healthcare costs and ultimately make better decisions. Many employers are starting to push employees to become more involved in their healthcare decisions while implementing plan changes to curb potential overuse of services, which include: Plan Redesigns: Some employers have started setting annual or lifetime limits on the number of visits or treatments covered by a plan. When coupled with the appropriate guidance on how to choose and use benefits wisely, this can encourage employees to get the right treatment at the right time for the right cost. Generic Drugs: To help reduce costs, many companies have started to educate employees on the cost–effectiveness of using generic drugs rather than brand–name drugs.
Consumer Driven Health Plans: More companies are educating employees on the benefits of consumer driven health plans, such as Flexible Spending Accounts and Health Savings Accounts.
Wellness Programs: According to the Hay Group, a Philadelphia–based consulting firm that surveyed 435 employers in 2006, 75 percent of employers now offer a wellness program, and 90 percent provide a disease management program.
THE POWER OF TRUE CONSUMERISM While learning how to use a plan wisely can greatly benefit workers, understanding how to choose the plan that is right for an employee is just as important. Even the decision to go with an HMO or PPO can have major implications if employees do not take all of their healthcare needs into account.
However, most employees do not fully consider their health benefits options because they often feel overwhelmed by the seeming complexity of healthcare plans. According to the MetLife study, 57 percent of employees spend less than 30 minutes considering their health benefits options for the coming year.
To further educate employees, HR professionals are helping people use tools on the Intranet and/or the Internet to obtain better information about coverage options and benefits, as well as health information on diseases, treatments and prevention. When coupled with the wellness programs and incentives, this can educate and encourage employees to remain healthy.
By providing employees with the right resources and guidance, employers can help their workers become active consumers who spend healthcare dollars more efficiently, demand high quality services and ultimately help reduce costs.
