Today’s employers are tasked with a delicate challenge – promoting profitable healthcare services while controlling employee costs. The National Conference of State Legislatures predicted that for 2019, the cost of providing medical and pharmacy benefits will rise 5% for the sixth consecutive year. As 2019 wraps up, this is looking to be accurate.
Employers become torn between protecting their bottom lines and giving their employees quality options that not only increase participation, but let employees know that they are valued. So how can employers walk this fine line and promote services while mitigating costs, especially for high cost claims?
Understanding High Cost Claims
To create effective cost mitigation strategies, employers need to understand the factors contributing to high healthcare costs and the effects of not addressing the issue, especially in terms of high cost claims.
Mercer recently conducted the National Survey of Employer-Sponsored Health Plans, which found that a rapidly-growing share of healthcare claims Is now going towards services that cost more than $50,000. For example, of the 1.6 million plan members in the database, the sickest 6% represented 47% of total medical and pharmacy spending per employer.
While the general population of employees are not contributing too much to healthcare costs on the employer side, they are still feeling it on their side. According to a Bankrate study, more than 20% of Americans skip medical care due to cost. Not only are they not getting the care they need, they are contributing to further issues that spill over into the workplace.
Individuals who forego medical care tend to use more sick days than those who seek care upon the first sign of illness, which can drastically reduce productivity. For example, if a 100-employee company has 20 employees not seeking care, and they take an average of 1 sick day per month, that’s almost 2,000 hours per year of productivity lost. Over time, that can spell big trouble for a business’ bottom line.
Additionally, high out-of-pocket costs can drive your most valuable employees to seek other employment opportunities—especially if they have dependents to consider.
Mitigating High Health Care Costs
Since mitigating health care costs (both for the employer and their employees) is a top priority, organizations should take a strategic approach to addressing this challenge. Here are some key areas where employers can evaluate their strategies:
By utilizing the following tools, employers can still provide a good healthcare experience to their employees, while keeping costs down on both ends:
- Telehealth. Telehealth is growing in popularity, especially among the millennial and Gen Z generations. By enabling employees to seek medical advice and have prescriptions written without having to visit the doctor, costs can be cut tremendously. This convenient option is a great benefit to offer people who easily adapt to new technology and are often concerned about the expense of an office visit.
- Incentive programs. Rewarding healthy behavior through incentives displays a great ROI for businesses. Whether it be gym membership reimbursement, smoking cessation programs, step challenges, or anything other healthy activity, these small changes in behavior often lead to a reduced need for medical care in the long run.
- Text message reminders. During busy workweeks, employees can often forget about their preventive medicine, vitamins, or exercise goals. Subscribing in a program that pushes text message reminders to employees can help keep their health on track and reduce the need for medical care.
- Working with the right partners. The right benefit partners can help you evaluate healthcare plans based on employee need. With access to an expansive marketplace and the latest benefits administration software, the right partner can make all the difference in mitigating healthcare costs.
These small changes in offerings and employee wellness initiatives can reduce the need for high-cost claims. That, in turn, keeps out-of-pocket expenses and premiums down for employees, while helping businesses maintain their bottom line.
https://www.acponline.org/acp_policy/policies/controlling_healthcare_costs_2009.pdf
https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/managing-high-cost-claimants.aspx
http://www.ncsl.org/research/health/health-insurance-premiums.aspx
https://www.bankrate.com/pdfs/pr/20180808-health-care-survey.pdf
