How health care analytics can help employers manage costs

The debate on national health care reform and the control of health care costs has highlighted a critical issue.

Employers have long been concerned over the burden that high health care costs has placed on their competitive positions. Despite concern from small employers to the federal government, there are no proven solutions for controlling the long-term rise in health care costs, says John Boss, an executive vice president in Aon Risk Services’ Health and Benefits Practice.

Smart Business spoke with Boss about how employers can control their long-term health insurance costs.

How can employers control the long-term cost of health benefits?

Traditionally, employers controlled the cost of their health benefit plans by cutting back on the scope of the benefits or raising employee out-of-pocket payments. While this approach can produce short-term savings, employers have increasingly realized that benefit cutbacks are not a long-term strategy for managing health costs.

As a result, employers have begun to take a more strategic approach, focusing on wellness and disease management programs to target lifestyle-related health conditions and chronic diseases. These strategies are aimed at changing individual behaviors in ways that will improve overall health status and reduce medical expenses. This approach holds greater promise for bringing long-term costs under control, but to succeed, it requires a much more sophisticated level of data analytics.

How can employers manage health risks?

Employers must take a new approach to data analytics, based around three core requirements.

  • Employers must tailor their strategies to specific at-risk groups within the covered population.
  • Employers should use predictive modeling tools to target specific health care risks and evaluate outcomes.
  • Employers should integrate all health- related information into a single data warehouse.