An uptick in health problems across the US is expected to have a lasting effect. According to a Milken Institute study, chronic diseases like diabetes, stroke, cancer, heart disease, hypertension, pulmonary conditions, and mental illness have an annual total impact on the economy of $1.3 trillion.
Businesses of all sizes are affected by employee well-being, making comprehensive health plans a must for employers. Employer-sponsored health insurance provides employees and their dependents with affordable health care services that in turn reduces employee absenteeism and helps workers maintain good health.
While the advantages of offering a health plan to employees are indisputable, there are some considerations that organizations need to make when choosing and setting up their plans.
Here is a look at some essential employee health information that employers often overlook.
A Recent Trend In Employee Health Benefit Design
In 2021, the Great Resignation left countless employers scrambling to fill more than 10 million jobs across the country. This ripple effect from the pandemic forced employers to look for new ways to attract and retain talent. Health care for workers and their families remains one of the most sought-after benefits, along with flexible work hours, paid leave, child care benefits, employee referral bonuses, and merit bonuses.
Recent trends are changing the way that employers approach their employee health benefits. According to a report published by the PwC Health Research Institute, health care costs are expected to rise 6.5 percent in 2022. In an attempt to lower health care costs, many employers are making the move to self-funded health benefits plans. With a self-funded plan, the employer is responsible for paying health claims by members directly to health providers instead of paying premiums to the insurance company to cover these costs. When built properly, self-funded plans have the same cash flow predictability as fully insured plans.
Making the move to a self-funded health plan design can have many benefits for employers, such as greater visibility into plan performance, increased control over risks, enhanced plan design, transparent vendor compensation, lower administrative costs, and fewer regulations.
Utilization Management As a Cost-Containment Plan
One of the best ways that employers can lower health plan costs is by encouraging their employees to enroll in a health plan and remain actively involved in their health care. Many employers begin this conversation by talking to their workforce about the importance of having health insurance, how they can improve their health education, and how to effectively price shop for plans. With the new hospital price transparency rule that went into effect on January 1, 2022, price shopping has become simplified.
Utilization management (UM) is a critical component of the health care ecosystem. This process helps ensure that health care systems continue to run efficiently and provide a certain level of care to patients. With UM, organizations can reduce the frequency of denied claims and better meet the unique needs and preferences of patients in search of care.
Through UM, organizations can continuously improve, lower costs, improve clinical outcomes, and focus on delivering an appropriate level of care. UM can also help improve communication between providers, payers, and insurers, as well as eliminate the occurrence of unnecessary or excessive treatments or procedures.
The Consequences Of Cost-Shifting
The term “cost-shifting” has garnered a lot of attention in the last few years. Cost-shifting occurs when a health-care provider or hospital charges an insured patient more than they would an uninsured patient for the same service or procedure. This controversial occurrence has been discussed at length in legislative, health care, and advocacy circles.
Cost-shifting is expected to phase out by the end of 2022 because of concerns about employees’ inability to afford a health care plan due to low wages. However, the consequences of cost-shifting are still a problem for many across America. Cost-shifting is generally done as a way to make up payment shortfalls from Medicare and Medicaid by charging privately-insured patients higher prices.
Medicare and Medicaid pay significantly less than the cost of health care services and products, resulting in ongoing losses for hospitals and other health-care facilities. This causes the federal deficit to grow, resulting in cuts made to Medicare and Medicaid services. In turn, providers and hospitals generate less revenue and insured consumers face higher premiums, deductibles, and health care service charges.
Benefit Designs That Increase Cost-Sharing
Patient cost-sharing is on the rise in the US The relationship between employers and health-care insurers plays a key role in how decisions are made regarding benefit design. These decisions are what ultimately determine a beneficiary’s access to health services and products. However, many employers are concerned about passing too many costs onto employees in fear that high out-of-pocket costs could affect employee health and productivity.
Although there has been a slowdown over the last decade, premium growth continues to outpace inflation and workers’ earnings. This has put a significant strain on employers who strive to contain costs while maintaining a sufficient level of quality. This steady growth in premiums has resulted in fewer employers offering health benefits.
According to a Kaiser Family Foundation survey, three percent of businesses revealed that they would drop health coverage for their employees and five percent said they would limit coverage within the next year. Unfortunately, many cost-containment strategies and benefit designs have had limited or no impact on hospital costs.
Impact Of High Out-Of-Pocket Costs On Employees
High out-of-pocket health care costs among employees are an increasing problem in the US, even with expanded insurance coverage available under the Affordable Care Act (ACA). Although the quality of coverage through the ACA has protected many Americans from high out-of-pocket health care costs, many continue to deal with medical expenses they cannot afford.
High out-of-pocket health care costs typically affect those with employer-sponsored health care coverage and those with incomes above 400 percent of the federal poverty level. High out-of-pocket maximums and deductibles in private insurance, coupled with exposure to out-of-network bills for health care services, have left many employees struggling financially.
Many employees face ongoing problems when it comes to health care. High out-of-pocket costs have contributed to poor access to care. According to a Kaiser Family Foundation survey, 32 percent of people with job-based coverage worry about unexpected medical bills, while 23 percent are most worried about out-of-pocket costs. Faced with this complicated situation, many employees are forced to reprioritize their expenses.
When the cost of health care increases, employees and their families often find themselves foregoing medically necessary health care services. According to a Kaiser Family Foundation survey, 38 percent of adults with job-based coverage reported that they or a family member had to postpone care services or medications due to cost. In addition, 23 percent revealed that they skipped dental checkups or treatment.
Speak With New City to Learn More About Quality Health Plans
Millions of employees throughout the country become seriously ill each year. Designing health care benefits to meet the unique needs of a modern workforce is critical to retaining top talent and ensuring that employees have access to the medical care that they need to be healthy and productive.
New City Insurance is a reputable employee benefits consulting firm that offers a wide range of services, such as benefits consulting, compliance, insurance, and tech services. To learn more or to schedule a consultation with a knowledgeable benefits consultant, contact New City Insurance.