Volume 1, Issue 7 (November, 2007)

2008 Health Care Costs Trends
 

Want to know how your company compares with the national average health benefit expenditure in 2008? Here are a few facts for comparison:

• The average health care cost will be $9,312 per employee—an increase of 7%

• Cost are expected to rise by an average of $577 per employee

• On average employers will pay $450 more per employee

• On average employees will pay $127 more for their health care

• Employers are expecting to subsidize 78 percent of next year's premium costs

• Employees will have to cover the remaining 22 percent, plus usage-based co-pays, deductibles and co-insurance

While planning your 2008 health care budget, do some comparison and see how well (or poorly) your company compares to the national average.  Recent studies show that companies who manage their health plans will see their annual per-employee costs about $1,500 less than companies who have no management oversight of their costs – that is a 20% savings!

So what can you do to contain your health care costs?  Listed below are best practices from companies that have lead to lower health care costs:

ü      Set a clear focus and commitment to supporting employees’ health.  Create a plan design that will support your employees’ ability to make sound health care decisions, that will motivate employees to manage their health care purchases responsibly, and manage health risks and conditions in the employee population overall.

ü      Managing by measuring. Develop and document your health care strategies -manage by fact. Create an extensive measurement of program costs linked to strategies.

ü      Ensure critical success factors are in place. Commitment must come from the top. Senior leadership (owners) must be involved, there must be support from managers and supervisors, and insure disciplined execution processes are in place.

ü      Increase accountability. Design you programs to make the true costs of care visible to employees, and hold them accountable for the decisions they make at the point of care.  For example, coinsurance rather than co-pays to share costs with employees.

ü      Engage employees. Require employees to be more accountable for their decisions.  Expand your communication initiatives and provide a variety of tools and resources to support employee awareness, understanding and action.

ü      Build a culture of health. Educate your employees as to the importance of healthy life styles.  Employees are more accepting of their roles and responsibilities when they have a better understanding how their behavior impacts their health and the cost of their health care. 

Show your employees that accountability swings both ways.  As companies ask their employees to become more accountable for their health care consumption and participate in cost-control initiatives, employers must become more accountable to employees by providing the resources, support tools, education and communication initiatives that employees need to be successful consumers of health care.  If your health plan is managed successfully, the rewards are numerous in financial gain, decreased absenteeism and improved employee morale.

Additional Thoughts on Health Benefits: 

(Why employers offer health benefits)

Despite the rising cost of health care, there are a number of advantages to offering health benefits to your workers.  Here are a few of the major ones:

ü      Attract and retain the most qualified employees.  Whether health insurance is absolutely necessary to attract and retain the most qualified employees will depend upon factors such as whether your competitors or other similarly sized employers are offering health insurance.

ü     Gain tax advantages.  You can offer employees something that increases their compensation package and yet allows you an income tax deduction for the contribution, so that your out-of-pocket cost is less than the value of the benefit to the employee.

ü      Offer employees group purchasing power.  Even if you decide not to contribute anything toward your employees' health insurance, you can offer them the opportunity to obtain group rates through your business.

ü      Ensure the wellness of your workers.  Many insurance plans offer preventative care that can keep employees healthy and working.  If employees don't get preventative care and yearly physicals (which they might not do if they don't have insurance), you could end up having more employees out for long periods of time with serious illnesses.