Health care costs in this country have more than doubled in the past eight years. The average employer-sponsored health plan now costs more than $8,500 per employee per year. The problem is even more dire for businesses in Texas. The state’s national ranking in medical care is one of the lowest on the basis of medical costs, access and quality.
“Costs are still outpacing general inflation, and the long-term outlook is grim unless we do things differently,” says Jeff French, Benefits Consultant for Gallagher Benefit Services Inc. “The time has come for a behavior change at the individual level and a cultural change at the corporate level. Rather than providing funds for ‘sick care,’ we have to look at how we can utilize information and dollars to provide true health care.”
Smart Business talked with French for additional insights on refocusing health care efforts and dollars.
What has been the norm in dealing with employers’ rising health care costs?
Over the past five to seven years, employers have reacted to rising health care costs by increasing their employees’ share of the bill (either through higher payroll deductions or higher co-pays and deductibles). Although shifting the cost burden to employees is the easiest short-term fix for employers, it is a poor long-term strategy for cost containment.
What about using technology to help?
Technology is everywhere you look these days, and the tendency in this modern age is to assume that a high-tech answer is always the best. Technology has certainly provided some amazing advances in medicine that have improved the quality of life for many people. Data mining and predictive modeling of medical information have also enabled health plans to identify and engage employees who are at high risk. But in our efforts to find some magic treatment or piece of information that will lower our health care costs, we have lost sight of one simple truth.
What is that truth?
It may not be glamorous or high-tech, but the simple truth is that healthier people have lower health care expenses. The preponderance of dollars expended by employer-sponsored health plans has been used to treat avoidable conditions related to unhealthy lifestyles. Only the leftovers are used for wellness and prevention. It’s no wonder that 67 percent of Americans are overweight or obese. As the number of obese Americans continues to rise, it is worth noting that health care spending for obese adults is about 56 percent higher than normal adult rates.
How does an employer go about reducing health care expenses?
The answer lies in behavior change at the individual level and cultural change at the corporate level. One recent study showed that behavior is the most important determinant of a person’s health status. Genetics, environment and access to care were the other determinants, but none of them were even half as important as behavior in determining health status. When people begin to adopt healthier behaviors, health care costs will come down.
How can this become accomplished?
First, an individual has to be ready to change. Employees need to understand that poor health and rising employer health care costs are taking up dollars that could otherwise be used for employee pay raises. They also need to understand that their current lifestyles will determine their quality of life in the future and their ability to enjoy retirement. Once employees understand these implications, it is incumbent upon employers to provide resources that will motivate and assist employees in their efforts to change. Maybe an employee wants to quit smoking or lose weight, but he or she doesn’t know where to begin or have the necessary support. This is where an employer-sponsored wellness program can provide the needed resources and incentives. Wellness programs come in various shapes and sizes with equally variable price tags, but there are a few key imperatives.
First, in order to create a ‘Culture of Wellness,’ there must be buy-in from the top officers in the company. They must lead by example and communicate with employees regarding their wellness success stories. Second, there need to be incentives that are meaningful to the employees. The amount of an incentive should obviously vary based on the demographics of the work force, but the key is to reward employees (and their families) for participation and achievement. The third imperative is a wellness-coaching program. Once a person is ready to change, the wellness coaches can provide information, support, encouragement and accountability.
By refocusing our efforts and dollars to encourage healthier living, we can spend fewer dollars on caring for the ill and more time enjoying good health.
JEFF FRENCH is a Benefits Consultant for Gallagher Benefit Services Inc. Reach him at (713) 358-5912 or jeff_French@ajg.com.