VOL. 132 | NO. 25 | Friday, February 3, 2017
Cost-Containment Strategies for Employers
BY TIM FINNELL
After wages, health care is the No. 1 cost for most employers. So, it’s no surprise that health insurance and health care costs have been making headlines for nearly 25 years. Hillarycare was introduced in 1993 and the topic has not moved out of the spotlight since. Current health care spending is over $3.2 trillion per year, which is equal to around 18 percent of our GDP.
There is much debate about what our country should do to control cost and provide affordable insurance coverage to citizens. However, from a business owner’s standpoint, the question becomes: How can employers control their health care spend?
First, employers need to have an understanding of the tools available to accomplish their objectives. While controlling cost is always a top concern, many businesses also want to focus on attracting and retaining top talent – and health care offerings are a benefit of interest to all current and potential team members.
Given the current market and the ever-changing landscape of health care offerings, most companies would benefit by engaging a seasoned professional who specializes exclusively in benefits.
While a number of strategies and tactics have proven effective in controlling health care costs, there are a few that consistently demonstrate long-term effectiveness:
Consider a form of partial self-funding for smaller, predictable claims. This can be accomplished via a health reimbursement account (HRA); a co-op plan with other like-minded employers; or level premium or minimum premium plans. These options all save money for the employer (versus the insurance company) when claims run better than expected and provide protection when claims are not favorable.
Make it easier (and less expensive) to obtain care. Cost and access to care are two primary obstacles to employees getting needed treatment. In fact, there are approximately 500 million visits a year to primary care physicians. An estimated one-third of these patients could have been treated effectively by telemedicine. Telemedicine also frees up physicians to have in-person visits with patients who require an office visit. Another current trend is mobile clinics that see patients at the workplace, providing the opportunity for an annual check-up.
Education. Medicine is ever-changing. As a result, only an estimated 12 percent of U.S. adults have proficient health care literacy. We are bombarded with confusing and conflicting information from drug and health care-related commercials, the internet, social media and the advice of friends and colleagues. It is imperative that employers and their health care partners become the main source of education for team members so that employees are armed with the information and resources needed to make informed health care decisions.
Encourage wellness. Creating a culture that promotes good health can be exponentially valuable in controlling health care costs. Strategies include wellness programs, smoking cessation tools, and gym memberships. Some employers use incentives to encourage participation.
The return on investment for the above strategies varies by employer and will depend on the company’s dedication to effectively implementing and maintaining the strategy. However, one truth remains clear: In the current health care market, a cost-containment strategy is an investment most companies can’t afford to overlook.
Tim Finnell, president and founder of Group Benefits LLC and a Certified Healthcare Reform Specialist, may be reached at 901-259-7999 or email@example.com.