The Status Quo For The New Decade

It tends to get overlooked that employer-sponsored health coverage is actually compensation. Like a salary or paid time off, it’s a component of the total monetary and non-monetary pay we provide employees in exchange for work performed. Though it may not register on our employee’s radar as such, on our spreadsheets, that dollar amount sits very clearly as the second biggest number behind salary and/or an hourly wage. And that number never seems to stop growing.

The total cost of healthcare in the U.S. hovers around $3.5 trillion per year (based on 2017 figures) and medical cost trend sits somewhere between 5 percent and 6 percent depending on the source. The Kaiser Family Foundation, in their 2019 Employer Health Benefits Survey, found that employer-sponsored family health coverage averaged $20,576, which is up 5 percent from the previous year. The employer share covered about $14,000 and that figure is predicted to be 5 percent higher next year.

We’ve come to know that growth as the status quo. And as we all know, it is unsustainable.

As costs grow each year, it forces our hand to try to contain them. In the benefits space, we’re in the business of sponsoring coverage to maintain a healthy and productive workforce; but we do ourselves a disservice if our efforts to combat cost increases upfront wind up costing us more on the back end. In all respect to our bottom lines, we have to take into account the physical, emotional, and financial wellbeing of our employees in our strategic decisions — an unhealthy workforce will cost us far more than a premium increase. It is therefore important to focus on the total cost of care--all of the direct and indirect costs associated with an episode of care for a period of health coverage. That is the number, not the premium increase, that truly reflects what we’re paying per employee.

So if the carrier has raised our rates and we’re thinking about implementing cost-sharing increases across the organization, we should ask ourselves a couple of questions. Chief among them, at what

point along the financial continuum do we start to negatively impact health outcomes? At what point does the cost of care seem so high that an employee will avoid medical care altogether? Even preventive care! And what are the costs associated with that decision? What are the costs of absenteeism, illness-related productivity loss, organizational morale, untreated chronic illness, preventable hospital stays, etc.?

Most employees equate their salary and/or hourly wage alone with the ability to pay for medical expenses, omitting the employer contribution from their calculus. With stagnant wage increases and ever-increasing healthcare costs (by some estimates, twice as fast as worker’s wages in the last 10 years), it's not surprising. In many ways, employees out-of-pocket health expenditures are making them sick.

That is the effect of the status quo on employers and employees alike: health costs go up, employers pay more, our employees pay more and organization-wide, human and economic health are put at risk.

But it doesn't affect everyone. There are high-performing organizations out there evolving their benefits strategy, improving health outcomes, and lowering costs. And we need to continue to pay attention to what they’re doing.

As we embark upon a new decade, Health Action Council will encourage and support all our members to shape and change the status quo of benefits and health. By investigating and vetting best practices that have demonstrably lowered costs for plan sponsors, we know that there are proven strategies available. In virtual solutions, primary care, streamlined consumer experiences, centers of excellence, chronic-condition management and a host of other solutions, there are many opportunities that can stem the tide of cost increases.

The status quo for the new decade will be to investigate these opportunities, to make certain our employees have the tools and resources they need to find the right care, at the right place, at the right price, and ultimately to ensure the health and wellbeing of our most important asset, our people, so our organizations can grow and thrive.