How to Reduce Rising Healthcare Costs
The Society for Human Resource Management reported in 2017 that benefit costs as a whole for U.S. employers have increased 24 percent since 2001.
A 2017 study by Willis Towers Watson concluded that employers can expect health-care costs to rise by 5.5 percent in 2018, escalating from 4.6 percent in 2017. Regardless of the price hike, employers remain positive about being able to provide health insurance in the future, with 92 percent expressing high confidence that they will keep sponsoring the benefit in the next five years.
This puts employers in the precarious position of delivering competitive health-care coverage that doesn’t strain the company financially. Following are some ways to minimize group health-care costs and to motivate employees to work for your organization.
Combine High-Deductible Health Plans with Health Savings Accounts
A report by the Washington Post indicated that employers are shifting toward high-deductible health plans (HDHPs). with around 90 percent stating that they will offer at least one HDHP in 2018.
HDHPs are one way for employers to save on health-care costs because the higher the deductible, the lower the premium. Although HDHPs reduce employer premium costs, employees often eye them with skepticism because they require employees to pay for their health-care costs out-of-pocket until the deductible (usually a sizable amount) is met. The coinsurance doesn’t kick in until the deductible is satisfied.
You can ease this burden on employees by pairing the HDHP with a health savings account (HSA). These accounts allow employees to save for medical expenses on a pretax basis, meaning that contributions are not subject to federal—and in most cases, state—taxes. Another alternative is to offer an HDHP plus an employer- and employee-funded HSA or a prefunded HSA.
Educate Employees on Cost-Efficient Options
Employees likely will welcome any news that can help them save on health-care costs. For example, let them know that it usually costs less to visit a physician during normal business hours than to go to the emergency room. If the issue isn’t an emergency, they should visit their doctor instead.
If you provide telehealth services, which typically are less expensive than emergency room and doctor visits, introduce your employees to the program and encourage them to use it when appropriate.
Identify More Ways to Lower Costs
Employers can lower costs in the following ways:
- Consider using narrow, or limited, networks that deliver top-performing physicians at affordable costs.
- Contract directly with providers that not only specialize in high-cost or high-risk procedures—such as transplants, back surgery, and joint replacements—but also offer bundled payment solutions.
- Carve out high-cost prescription coverage by contracting directly with a pharmacy benefits vendor to administer your prescription program.
To identify winning strategies to reduce health-care costs, employers must be willing to work directly with vendors who understand the health-care market, including how to survive its volatilities.
If you want more information about reducing health-care costs, contact us today.