Knowledge is a critical weapon in the battle against rising health care costs. As more employees become responsible for paying for a greater portion of their health care coverage, the ability to make smart consumer decisions becomes more important than ever.
“The average person with health care coverage is blissfully unaware of the real cost of health insurance,” says Bob Dawson, president and CEO of Health-America and HealthAssurance.
Smart Business spoke to Dawson about the importance of being an informed consumer in the health care market.
How well informed are consumers of the costs of health care services?
If a person goes to the doctor for a sprained ankle, the copayment only covers a fraction of the cost, even though the person might feel like he or she is paying a significant portion. Nor do people realize that getting a sprained ankle treated in an emergency room can be more than 10 times more expensive than receiving the exact same treatment at their doctor’s office.
So being unaware of actual health care costs contributes to several problems. One, an increased use of services; secondly, a general dissatisfaction of benefits because people don’t understand the underlying costs. Finally, there is a resistance to any changes in benefits. So without a real understanding of health care costs, employees are not informed consumers.
Are we better consumers than we were when employers paid for all benefits?
We are becoming better in certain areas, typically with pharmacy programs, using the emergency room and some physician office visits. As individuals share in a greater portion of the cost for their pharmacy benefits, they might be more willing to consider using generic drugs or even a therapeutic alternative. A good example is taking Prilosec, available over the counter, as opposed to taking Nexium, which is much more expensive. We encourage people to speak to their physician about taking Prilosec because the cost and the copay will be substantially different.
The same is true with the emergency room. If people realize there may be a significant copay for the ER, perhaps they will think about going to their physician’s office rather than to the emergency room for nonemergency situations. Of course, if it’s appropriate, we want them to go to the emergency room and get the treatment they need in a timely fashion.
What are some ways to help employees become informed customers?
First, recognize that health insurance premium increases are directly due to underlying increases in health care costs and utilization. So the math might be something like this: Let’s just say the unit cost of health care services (a doctor’s visit or a hospital stay) increases at 5 percent a year. The utilization of those services increases another 5 percent per year and now you have more than 10 percent annual increase reflected in the health insurance premium.
Then the best thing an employer can do is share the cost of health insurance premiums with employees. In fact, many employees will be shocked to learn what their employer pays on their behalf. Communicating this information is especially important during times of open enrollment or during benefit changes. But it’s never too early to start. An employer needs to spotlight the per-employee average or highlight the cost of individual and family packages. This compensation does not show up on paychecks and employees don’t really understand its value.
An employer can also compare the benefit package offered by the company to the national average or other companies within the industry. Often, a company’s cost-sharing amounts, deductibles and options are the same or better than the national average, but their employees do not realize it.
What information can employers make available to their employees?
Here’s some information that employers can share throughout the year.
First, explain the factors driving health care costs. They include increased use of services, new and experimental services, duplication of services and the like.
Let the employees know that a trip to the emergency room for nonemergency treatment costs much more than a visit to the doctor’s office.
Explain the differences between emergency care and urgent care.
Educate the employees about their pharmacy options and the difference between generic and brand-name drugs.
Promote the use of in-network providers, as there is usually a financial incentive to use them.
Post newspaper stories about the increased costs of health care. This information is often covered in business publications or your daily newspaper.
But most importantly don’t forget that the best and cheapest way to treat any illness is to prevent it in the first place. Communicate health and wellness tips, like those available on many reputable health education Web sites.
BOB DAWSON is president and CEO of HealthAmerica and HealthAssurance. Reach him at (717) 540-6353.