An insurance company executive and the CEO of a health plan provider tackled the issue of rising costs in a workshop at the Northeast Human Resource Association's recent annual conference.
MetLife probably furrowed some brows. Ronald Leopold, VP and National Medical Director of MetLife, laid out a huge span of research and statistics. He noted the following issues, which he says are guaranteed to characterize healthcare coverage for the foreseeable future:
- Employers will keep shifting costs to employees.
- Funding retirement will become an even bigger issue than it is now.
- Technology will drive new healthcare delivery and information possibilities. (That is, some treatment and most information will be available on line.)
- Consumer-driven plans, and better-informed consumers, are here to stay.
- Healthcare costs will continue to rise faster than other economic indices, such as the consumer price index.
- The talent war is increasing for all employers, boosting the pressure to provide competitive healthcare coverage.
- And most significantly of all, the population is aging, which drives up healthcare use and costs.
Leopold also pointed out areas of employee ignorance that prevail: More than half of employees nationwide believe their employers spend $3,000 a year or less on their healthcare coverage (while the real figure is more than double that); they equate the true cost of an office visit with their co-pay; and they don't understand that in recent years they have sacrificed salary increases for their healthcare coverage.
Another serious problem is a symptom of the brokenness of the U.S. healthcare system: It rewards providers of acute and tertiary care (tertiary is specialized care for cancer or burns or neurosurgery or plastic surgery) more than sources of primary and preventive care, wellness programs, or treatment of chronic conditions. As Leopold puts it, "Doctors are better off treating cancer than preventing it."
Employers are in a bind. Not only do their costs keep rising each year, but they must ensure that the plans they offer are attractive and competitive, or risk losing top people to other organizations. Employees want coverage that meets their particular needs, whether they are young singles, family members, or empty-nest older adults. At the same time, the younger employees are, the more important salary will be to them; while the older employees get to be, the more they value healthcare coverage.
Leopold observes that it's easy to estimate the kind of benefits coverage an employee needs, once you know the person's salary, age, number of dependents, and amount of retirement savings. But employees don't know how to make those estimates, so employers need to educate them. That is, while employers have been forced to shift more costs to employees, they are also saddling workers with more risks and responsibilities--so it's up to employers to arm employees with the information and tools to cope with that.
Harvard Pilgrim says something can be done. Charles Baker is the top executive of Harvard Pilgrim Healthcare, and he thinks he's seen the future. He related how in 2002, his organization first offered a high-deductible, consumer-driven health plan (CDHP)--and he was the only employee to sign up for it. Worse, his card said his deductible was $1,000, but it was really $2,000 because he'd chosen family coverage. Over the past 5 years, however, the company has worked hard to give workers plenty of information to make the right choices.
Another effort is on simplifying coverage options so they are easier to understand. Now the organization offers only three plans and points employees toward the CDHP by making it the benchmark: Another plan is cheaper and the third, more expensive. A whopping 65 percent of Harvard Pilgrim's employees chose the CDHP in 2007 and have been well satisfied with it. Further, the majority tend to see the costs of health care as a joint employer/employee responsibility. Baker says companies will not reap huge savings immediately, but will definitely save substantially over time. So he urges employers to take a long-term approach to coverage planning rather than make a series of one-year transactions.
Other employers can follow Harvard Pilgrim's lead. However, Baker finds they're slow to jump on the bandwagon. He notes ruefully that business people said that something would give when healthcare costs grew to 10 percent of the gross domestic product. But the figure rose to 16 percent in 2007, and there are no breakthroughs. Harvard Pilgrim offers the same educational tools for employees, including a calculator that can be downloaded and a benefit plan and cost estimator to employees of its subscriber companies. And he urges employers to ask their insurers to educate their employees on site.
Harvard Pilgrim discovered, for example, that many employees who were new to the CDHP didn't know what a deductible was. So benefits educators call each new enrollee to explain plan features. Finally, he urged employers to allow their insurers to refuse to include over-expensive providers in their networks in order to control costs.