Employee Healthcare Benefits: How to Lower Healthcare Premiums
Fight Back the Rising Costs with New Strategies
Employee healthcare benefits are eating more of our profits, but none of us need to be victims when there are still ample opportunities to reduce employee healthcare costs. We can’t change the methods engaged in price increases, but we can change the rules concerning how we play that game. Many of the reasons for rising costs of employee healthcare benefits are results of inaction at the grassroots level. Many items are addressable and produce results, but it takes some effort on a company’s part to establish cost containment campaigns and incentives for employees to participate as part of their employee healthcare benefits.
Continue What We Are Doing and No One Gets Ahead
The real cost of employee healthcare benefits is more of a response to a nation in poor health than it is to coverage rates. Think of it – what really drives up the costs? It is the presentation of more people seeking more medical care to stay healthy. The root of the problem is people looking for an overburdened healthcare system to keep them healthy when they should be concentrating more on keeping themselves healthy.
Healthcare Costs: What Employers and Employees Now Pay
Employers provide the bulk of the access to the healthcare system.
2005 2010
Company Pays 80% Company Pays 77%
Employee Pays 20% Employee Pays 23%
Employee Dollars $1,640 Employee Dollars $2,300
Five years ago companies shared the cost of access to healthcare in roughly an 80/20 split. At present, that spit is closer to 77/23. That seems like a minor shift but the dollars involved have exploded by 40%, almost half again more dollars out of the employee’s wallet than five years ago. Additionally, employees have to pay more out-of-pocket in co-pay, uncovered tests and uncovered conditions that were fully covered just a few years ago.
Total Healthcare Projections for Employees (including out-of-pocket)
2001 2009 2019
$4,900 $10,700 $28,500
By 2019, the total amount each employee will spend is expected to rise 166% over 2009. It has already risen 118% since 2001. Where is all that money going to come from? Unless you are forecasting huge profit increases and enormous salary jumps, something else has to happen to change the pattern or everyone loses. We need to become more efficient, and we can.
When Health and Healthcare Decline, Costs Rise
The most insidious result of the rapid rise in seeking care within the healthcare system is that employees do not take care of themselves as much, and that results in:
- Higher absenteeism rates.
- Longer times on workers’ compensation.
- Greater disability costs, both short and long term.
How to Bend the Cost Increase Curve Back in Your Favor
Three-quarters of companies asked, who have shown improvements in bending the curve, have adopted the attitude that they need to be responsible for providing encouragement for better health behaviors. Companies make the greatest strides when wellness programs are at the center of cost containment strategies. Almost two-thirds of those companies say their biggest obstacle to overcome is changing employee attitudes related to improving their own health. The two most common reasons are:
- Lack of financial incentives to encourage participation in wellness programs.
- Not enough time on the part of employees because of too many other demands on their time.
As a business, you can reduce the curve by providing more time and incentive to employees getting, and remaining, in good health.
Three Great Places to Target:
- Increasing physical activity
- Reducing weight
- Cessation of smoking
What You Can Do to Address the First Three Targets:
- Sponsor discounts at health clubs and provide lunchtime access to nearby facilities.
- Sponsor weight loss contests and monetary incentives for progress and weight lost.
- Stop accommodating time off to provide smoking areas and start sponsoring cessation programs.
Increased physical activity and weight reduction result in lower stress and better resistance to disease. Both account for greater attendance and productivity. The change in behavior contributes to reversing incidence and seriousness of heart disease, circulatory problems, diabetes, breathing disorders and many other chronic maladies.
Smoking cessation has multiple immediate effects – not just to the employee, but to the company. Smoking costs your business lost productivity hours every day. Smokers also have more days off because of colds, allergies, and other health problems directly related to the effects of smoking on an otherwise healthy body.
The Proof Is in the Results
Companies with engaged employees taking part in the own health improvements have proven there is a possibility for great returns on that investment. Here is last year’s experience of employers by activity:
- Top performing employers in wellness programs saw a rise in healthcare costs of only 0.5%.
- Average performers saw an increase of about 6%.
- Poor performers in wellness programs rose about 10.5% in costs.
- Non-performers saw an increase in employee healthcare benefits expenses of up to 22%.
There is money to be gained from a solid investment of time and money at the grassroots, employee level.
Your company can bend the employee healthcare benefits cost curve in two ways:
- Help employees get in better shape.
Employees and employers have many preventative steps they can take to assure better health. The result shows in better attendance and productivity.
- Engage CBR to use its large group buying power and healthcare management skills.
Take advantage of this important benefit to outsource HR services to CBR. We can help you manage cost containment strategies. We also help reduce your overall expenditure through our larger buying power as a group health insurance provider.
Give CBR a call at our toll-free number, (888) 700-8512 and we can describe exactly how HR services can help you contain the rising costs of employee healthcare benefits and other human resources issues.
