In America, we have created the best health-care system in the history of the world. But this best system faces some difficult challenges. Employers need to rethink their health-care focus from just buying an insurance policy to adopting a managed, data-driven health-care strategy.
As cost goes up, employers either shift it to employees or absorb the cost themselves — [or do a combination of the two approaches]. Many employers use these strategies and most benefit agents and brokers promote them as a way to give employers a financial number with which they can live. But as premiums go up more and more, [employers can only absorb the cost for so long before] it is shifted to employees through higher premium contributions and higher deductibles and co-pays when they use medical services.
Another issue is that employers monitor discounts (price) but not utilization. This is like monitoring how much natural gas costs to heat your house, but not how much natural gas you use. By spending a little more on insulation, you can save a lot on natural gas. By spending a little on prevention you could save a lot on health care.
Employers receive claims-data reports, which are helpful. But without a plan to produce an outcome, it’s all just data. Unfortunately, health care is one of the few things in life we purchase without having a clue about what it will cost, even though that same quality health service can vary by hundreds and even thousands of dollars from one provider to the next.
Employers also tend to focus solely on large claims, which is akin to looking in a rearview mirror. They don’t adopt a strategy to keep healthy employees healthy so they can avoid some of those large claims altogether.
While employer-sponsored health fairs and wellness screens are nice events with plenty of good information, employers I’ve spoken with tell me they get low participation and it does little to engage employees to change behavior. So, what is the solution?
Here are nine employer strategies we are sure to see this year.
1. Employers will be directly involved in helping manage the health-care delivery system. This will educate their employees on where they can get high-quality care at the best price and will reward employees that are good consumers.
2. Employers will closely monitor utilization patterns and the costs from the 25 percent of the population that drives 90 percent of total costs. They will use this information to steer care away from high-cost emergency rooms to lower-cost care options through education and plan design.
3. Employers will receive executive reports analyzing trends, demographics, actionable clinical information, chronic disease reports, health-care index factors, etc. This information will help employers provide benefits that are customized to provide better preventive care and lower costs.
4. Employers will focus on health-care provider process-improvement programs and know the value of specific providers. They will look for business partners who can be a resource to their employees to help them avoid health risk rather than wait for poor health and pay for it.
5. Employers will know the health-care index of their population and focus on large-claim prevention. roviding tools like health-risk assessments and wellness coaches for employees to avoid health risk before it becomes a disease mounts a strong defense against large claims.
6. Employers will implement chronic-disease management programs, predictive analysis, nurse navigators, nurse practitioners, and wellness coaches.
7. Employers will focus on managing the 80 percent to 90 percent of their health-benefit costs that involve claims rather than just the 10 percent to 20 percent that are administrative costs.
8. Employers will look to partner with advisers who can help them manage employee health and safety risk on and off the job, instead of just selling them another insurance policy.
9. Employers that make effective, positive changes to the way they manage their health care will be rewarded with healthier, more productive employees and lower costs for both the employer and their employees.
For the health-care system in the U.S. to remain the best in the world, it’s imperative for employers to develop and implement plans to better manage their health-care benefit costs without further shifting costs to employees. The time is right for employers to redirect their focus from the administrative costs of their health care (the 10 to 20 percent), by just bidding and quoting their insurance, to focusing on the claim costs (the 80 to 90 percent), where they can not only enjoy lower costs, but also employees that are healthier, happier, and more productive.
Randy Boss is a certified risk architect at the Ottawa Kent insurance agency in Michigan. He is a lead instructor for the Institute of Benefit & Wellness Advisors, training agents nationally about how to bring risk management to employee benefits. Contact Boss at rboss@ottawakent.com