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Tuesday, 08 February 2011 09:36

The Solution to Rising Healthcare Costs

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In today's society, most organizations are being challenged by the rising cost of healthcare. It is not a coincidence that one of the main reasons for the skyrocketing medical premium costs is the overall health of our nation's workforce. The following list details some very frightening statistics relating to our health as a nation (Centers for Disease Control, 2009):

  • 67 percent of the total population is overweight or obese.
  • 10 percent of the active workforce is diabetic, and 40 percent are pre-diabetic.
  • 50 percent have high blood pressure, high cholesterol, or diabetes (1 in 7 remain undiagnosed).
  • 25 percent have metabolic syndrome (3 out of 5 risk factors).
  • 80 percent of the workforce has high levels of stress.

The impact that these factors have on health care related costs can be seen in the following numbers:

  • Annual U.S. Health Care Spending
  • $2.4 trillion in 2007
  • $4.3 trillion in 2016 (estimated)

Employer and Employee Health Insurance Costs

  • Since 2000, health insurance costs have increased by 120 percent for businesses.
  • Since 2000, health insurance costs have increased by 143 percent for employees.

In order to maintain medical coverage for employees at a relatively reasonable cost, many organizations have resorted to changing or modifying their plan designs. Companies are being forced to raise deductibles, out of pocket maximums, and copays. This tends to frustrate employees because they are, in essence, paying more money for a benefits plan that offers fewer benefits. This strategy, which can prove mildly successful in the short term, will eventually "cap out," due to groups reaching the highest deductible plans that the health insurance carriers provide. Many carriers do not offer plan designs with a deductible greater than $10,000. Once the group finds itself at this point, there is not much that can be done to further reduce premiums.

In the early 2000's the industry introduced new plan designs that were designed to shift the focus of the employees to the "true costs" of tests and procedures. The industry coined the term "consumerism" and charged the employees with taking control of their own healthcare spending. The Health Savings Accounts (HSAs), Health Reimbursement Accounts (HRAs), and High Deductible Health Plans (HDHPs) were born. This health care "consumerism" was supposed to curb the fast-rising health care costs once and for all. The only problem was that the industry underestimated the public's dependence on copays. Many employees struggled with the idea of giving up their familiar and safe copayments and resisted the new plans. Once the plans began to gain acceptance, employees started to figure out that they could easily meet the deductible and gain access to free healthcare. The first HSAs, in particular, were set up with 100 percent coinsurance. This meant once the individual hit the deductible, the carrier would pay 100 percent of the remainder of their health care costs. The claims started to pile in, and soon the new plans were increasing at a greater rate than the old Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs).

Today we find ourselves in much of the same dilemma, only now the premiums are increasing at an even greater rate. The only solutions that can be identified for the long-term success of any organization's benefits program are the continuous education of employees concerning consumerism and the establishment of a wellness program.

Consumerism has evolved into an all-encompassing term. It still focuses on the employees taking control of his or her health care and managing it in an effective manner, but the ways in which they can do it have changed dramatically. Gaining access to competitive health care pricing information on your own is akin to searching for a needle in a haystack. It can be found, but the individual looking for it should be prepared to spend a very long time searching. This should come as no surprise, but different medical facilities charge different amounts for the same tests and procedures. Having access to this type of information will have a dramatic effect on the claims costs that an individual will accrue. An easy example of this can be found if one looks at the abundance of retail stores with generic prescription programs. Finding generic prescriptions for a fraction of the cost of what many carrier plans provide has become as easy as walking into your neighborhood Target or Wal-Mart. A more advanced example deals with many of the Patient Advocacy companies and providers in the marketplace. Some of these companies are now able to access cost and quality information to provide to employees. Armed with this information, employees are now able to make informed decisions on where they have a test or procedure performed. They have become true "consumers" of healthcare. These activities are all designed to lower the total claim amount for the individual and the organization, thereby creating a culture of savvy patients.

As one can see from the statistics put forth in the beginning of this article, we are an unhealthy nation. The only true long-term solution to combat the rising cost of healthcare is to become healthier as a group. One way to accomplish this is through the implementation of a wellness program. A wellness program can be as simple or advanced as an organization would like to make it. The most integral part of the program is to provide consistent communication and create an overall culture of wellness that permeates all levels of the organization. The results will show over time:

Chronic diseases related to lifestyle account for 75 percent of national medical costs. Eleven separate studies by the Centers for Disease Control suggest that worksite wellness programs can produce significant improvements in employee health.

The next few paragraphs will detail a wellness program that has achieved success within one of the major medical insurance carriers, Aetna. The executives at Aetna made the decision in 2004 that they needed to live and sell a culture of wellness. In 2005, they launched a very detailed, organized wellness initiative designed to encourage and help everyone in the organization become healthier. The program was designed to reach out to the employees in five main areas: healthy eating, physical activity, tobacco cessation, stress management, and health risk assessment (HRA)/benefits.

The first category of wellness tackled by Aetna was healthy eating. A survey of on-site food services and vending machines was performed to ensure that at least 30 percent of all the food available were healthy choices. A wellness team took things a step further and advised that "balanced choice" meals be provided. These meals meet specific nutritional criteria. Desserts and cakes were discouraged for employee birthdays and it was suggested that healthy snacks such as wraps or fruit be brought. Aetna also provided educational programs and incentives for healthy eating. Nutritional posters and videos were a large part of the educational campaign, while incentives such as once you buy nine pieces of fruit you get the tenth free, made this category a success.

Physical activity was the second category highlighted by the Aetna wellness plan. They worked very hard to develop a comprehensive, multi-dimensional program for their employees. The program includes:

  • On-site fitness centers.
  • Discounts with national and local health clubs that are in close proximity to where employees live and work.
  • Fitness subsidy to all employees to promote an equitable benefit and enhance affordability.
  • Online health behavior modification programs, self-guided print material, and fitness action campaigns.
  • On-site group exercise classes and walking opportunities where appropriate.

All of these options allow employees access to some sort of physical activity in one way or another. Participation incentives were given for those who logged minutes exercising or recorded steps on a pedometer. Aetna did not just stop with the employees, they specifically reached out to the dependents of the employees to join in on the friendly competitions and promote healthy action.

The next area of focus was tobacco cessation. Aetna provided, at no cost to employees and eligible dependents, the Quit Tobacco Program. Many of the prescription smoking cessation medications were covered at 100 percent. They provided a six-month supply during a calendar year to help employees who were actively trying to kick the habit.

Stress Management was another main area of concern and focus for the wellness plan. Through flexible work arrangements and the employee assistance program (EAP), Aetna was able to provide many avenues for employees to deal with stress. The EAP consists of 24/7 telephonic counseling, as well as six face-to-face visits. On-site seminars were also performed on many different topics, ranging from effective communication at work to parenting. Financial counseling and tools were also provided to the employees at no additional costs.

Finally, all employees were encouraged and incentivized to take part in an online Health Risk Assessment (HRA). This assessment recommended programs available to the employees online and also provided access to a health coach if they scored above a specific risk level. The benefits plan was also tailored to ensure that preventative visits were covered at 100 percent. Early detection is always the key to treating any kind of major medical ailment. The best way to detect an issue early is for employees to have their annual physical done every single year.

By making an investment in wellness and continually monitoring and changing the program to fit the employee's needs, Aetna was able to see some truly outstanding results. The wellness/fitness program reduced employee risk factors by the following amounts:

  • 78 percent of high-risk employees lowered their cholesterol.
  • 65 percent of smokers quit or reduced their smoking.
  • 55 percent of employees with hypertension reduced their blood pressure.
  • 47 percent of employees reduced their body weight.
  • 46 percent of employees increased their regular physical activity.

In 2008, a study was conducted to evaluate the influence of exercise on medical and pharmacy costs, utilization of selected medical services, and key clinical outcomes. It was concluded that the employees who participated in the program experienced lower combined costs than those in the control group. The participants also experienced higher rates of preventative care visits, routine eye exams, cholesterol screenings, mammograms, and prostate screenings. A survey was also taken of the employees in 2008 with the following results:

  • 86 percent increased their physical activity.
  • 53 percent lost weight.
  • 79 percent experienced an increase in energy.
  • 99 percent indicated that they would participate again next year.
  • 76 percent indicated their direct supervisor supported their participation.

Because of these results, Aetna has continued to offer their employees access to a wellness program. They believe that by making the investment in wellness now, they will have a healthier population as they continue to move on into the future.

This is just one example of a wellness program that has returned positive results. Every organization needs to look into its own culture and decide how they can best reach their employees. Once again, a wellness program can be as simple or advanced as you would want. The main ingredients for success include executive buy-in and effective communication throughout the process. By doing these two things, a company can effectively create a culture of wellness and a healthier population in the future.