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Healthcare expenses are one of the greatest burdens on today’s organizations. The financial strain of increasing healthcare expenses that outpace inflation and annual pay increases is having serious consequences. In addition to reducing profit margins, increasing costs leads to disgruntled employees who are tired of having their disposable income eroded by higher payroll deductions. Yet, one of the reasons medical costs continue to rise is because workforces are sicker than ever. No employer is spared from the exorbitant costs of chronic illness, including diabetes, cancer, heart disease, and other high-cost health issues. Many of these employees, some with one or more chronic illnesses, become high-cost claimants. They often require ongoing prescription drugs that can easily cost employers $100,000 or more.
If you've projected your organization's healthcare costs over the next five years, you know the numbers are staggering. For example, consider a company with 500 employees and an annual healthcare spend of $5,625,000 ($11,250 per employee per year). With the medical trend averaging 7 percent, in five years, that same company will be paying $7,889,355 per year ($15,778.71 per employee per year). This trend is unsustainable, and this is why so many employers are forced to shift more of the financial burden to employees continually through higher deductibles and out-of-pocket maximums. The good news is that more employers are creating highperformance health plans in order to control costs and maintain robust benefits for their employees. What’s the secret? Build your employee benefits strategy to include these two goals: 1. Eighty Percent Engagement in Preventive Care The reality is that most employers do not track what percentage of plan participants use their preventive visits. These benefits are available at no cost to plan participants as a result of the Affordable Care Act, but most employees never take advantage of them. By promoting and incentivizing annual physicals for employees, health issues are detected at an early stage, which can prevent future chronic illnesses and additional high-cost claimants. 1. Seventy Percent of Chronic Illness Patients Hold the Line or Improve Chronic illness patients typically account for 4 to 8 percent of the employee population. However, they usually account for more than 50 percent of the company's annual claims expense. In short order, they are a health plan killer. Creating programs to manage and control costs for those with chronic illness is critical. These programs may include onsite or near-site direct primary care, free maintenance medication such as insulin or blood pressure medicine, and free access to healthcare advocates to improve care compliance. These tactics reduce barriers to care and will help stabilize what your company is spending on high-cost claimants. By using the above tactics, employers can reduce costs and bring long-term stability to their health plan costs. Rather than the industry’s typical 7 percent annual trend increase, these high performing health plan costs increase at a rate of only 1.25 percent per year. That same company with 500 employees will save $1.9 million dollars in a five year timeframe. That is cash that can be freed up for wage increases, used for capital expenditures, or held as retained earnings.Rather than the industry’s typical 7 percent annual trend increase, these high-performing health plan costs increase at a rate of only 1.25 percent per year
