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Benefits Costs
The unfortunate reality is that most people don't understand the real costs of health care. It's not their fault.
They've been shielded from the costs by employers who've been bearing the brunt of continual premium increases, by managed care HMOs that never reveal costs, and by insurers and providers who keep charges hidden until after services are received.
The problem is that as costs continue to rise, employers-who have been paying the same percentage of costs-take the rap from unhappy employees who see their premium share and out-of-pocket costs increase.
Employers providing health care coverage are the good guys. We want your employees to know and appreciate the benefits you provide. Here are some facts you can use to present your case:
- How premiums have increased
- Public perception of costs vs. reality
- Where premium dollars go
- Who is using care
- Employers as the good guys
How premiums have increased
Right: Between 2000 and 2005, insurance premiums increased five times faster than inflation.
Below: Between 2000 to 2006 similar HMO plan premiums almost doubled. The premium gap between age bands continued to increase proportionally.
Public perception of costs vs. reality
While healthcare premiums are rising, in general the increases are not going into the insurance companies' pockets.
While public perception is that only half of the increases are going to medical care, on average, around 85% of the increases go towards care. This includes higher cost procedures, prescription drugs, more services, etc.
In addition, people are living longer and many once fatal conditions are treatable as chronic conditions. Some of the increased costs are due to increasing numbers of persons with chronic conditions.
Who is using care
In terms of usage, just 1 percent of the population accounts for 27 percent of all health care expenditures.
The US Department of Health and Human Services' Agency for Healthcare Research and Quality reports that half of the population spends little or nothing on health care, while 5 percent of the population spends almost half of the total amount.
In 2002, the five most expensive health conditions were heart disease, cancer, trauma, mental disorders, and pulmonary conditions.
Employers are the good guys
Over the past ten years, employers have consistently paid 85% of their employees' healthcare premiums. (See the Kaiser Family Foundation Employer Health Benefits Annual Survey.)
It is true that benefits plans have become less rich as insurers decrease benefits and increase copayments, but employers have done their best to keep contributions towards coverage steady. Even so, average single coverage premiums have doubled between 1999 to 2008 from $2,196 to $4,704. Wages and salaries certainly have not!
Over time, it will be impossible for employers to continue to fund the increases on their own. Reform is necessary, but in the meantime, employees need to be aware the real costs and take responsibility for their personal health care spending. Use benefits communications to partner with employees in using their health care wisely.