Employer-Employee Cooperation Key to Health Issues
by John M. Word III
Earlier this month, health care experts at management consulting firm Towers Perrin issued a report encouraging employers to “act now” to minimize the impact of health care cost increases projected over the next several years.
The report confirmed health care costs are growing faster than any other segment of their business and that to manage these costs, employers “need to make bold decisions.” Just days later, these concerns were dramatized with a report by the Health and Human Services Center stating that health costs are expected to grow at a significant rate over the next decade. The report projected that by 2011, Americans will be spending on health care about double of what they spent in 2000.
The confluence of these two reports offers a chilling forecast to business owners and their employees across America. Sixty percent of non-elderly Americans receive their health insurance through job-based coverage. As health care costs rise , driven by higher medical and provider costs, new technologies, pharmaceutical advances, labor shortages and the like , those increases are passed along to employers in the form of higher health care premiums. Soon, for many , particularly small employers , these increases become untenable.
Employers Dropping Coverage
Pressured to improve profitability and better manage costs amidst a weakened economy, some employers will invariably decide to drop health care coverage as an employee benefit. Already 6.2 million Californians are without health insurance, and it is estimated that every 1 percent rise in premiums results in as many as 40,000 additional Californians losing their coverage. Individuals seeking to purchase coverage on their own will be subject to intense medical underwriting and, when able to locate coverage, will find such coverage unaffordable without employer participation in the cost of premiums.
That is one of the primary reasons why it is predicted that as many as 60 million non-elderly Americans, or one-fourth of the population, will be uninsured by 2007.
Ultimately, we all pay both morally and financially as this societal tragedy proliferates. And so it is time for all of us to play a role in reversing the precarious course on which we now travel.
Contain Skyrocketing Costs
The health care industry must find ways to halt skyrocketing medical costs. This begins with responsible use of medical resources, allocating appropriate spending on research, welcoming less-costly complementary medical alternatives, embracing “best practice” clinical guidelines and confronting soaring malpractice insurance in a society that is infatuated with litigation.
At the same time, the insurance industry must continue to develop innovative solutions that provide employers a livable option that will prevent their dropping health coverage. This includes migrating to defined contribution benefit programs, consumer-directed health purchasing alliances and other such models that provide employers the cost controls they need while empowering employees to choose coverage that’s right for them.
As for employers, they must recognize, as the Towers report correctly points out, that “tweaking current programs will generally not be enough They (employers) cannot afford to be as cautious as they’ve been in the recent past.”
Part of this means doing a better job educating employees about the costs of health care so they may partner with them on ways to reduce costs. And the public at large must realize that the idea that we as citizens have a limitless “right” to health care without some reasonably well-defined set of obligations to manage our own risk won’t survive much longer nor should it.
The time for us all to get started is now. Already most employers are facing double-digit health insurance premium increases for the first time in many years. The planning and implementation of major changes require significant time if those changes are to be effective and sustainable.
Fortunately, some of the solutions are already available. They await those who prefer to take steps today to avoid looming disaster tomorrow.
Word is a former president of the California Association of Health Underwriters and is managing partner of CaliforniaChoice.