HealthcareAs we march ever closer to the implementation of the Affordable Health Care Act (ACA) or “Obamacare” on January 1, 2014, there is increased concern that employer-based healthcare coverage will be untenable for both employers and their employees.  Rumors abound that the only way employers will be able to reduce health care costs and offer coverage to their full time employees is to reduce the majority of their workforce or replace many of them with part-time workers, who either get their coverage from the marketplace (or ‘The Exchange’) or from Medicaid.  While these are certainly options, albeit severe, there are other ways employers can help to curb health care costs without cutting the workforce.

So, what’s an employer to do if she wants to attract and maintain an exceptional workforce and offer reasonable health benefits without passing the costs off to her employees?  Listed below are seven suggestions that every employer can use to cut costs:

  1. Wellness Programs:  Starting or revamping an existing wellness plan is a great way to reduce the company’s overall healthcare costs.  As a matter of fact, there are incentives in the ACA for employers and workers to take advantage of these programs.  In exchange for employees meeting a company’s healthcare goals, workers may save up to 30 percent of health insurance costs. The discount can be even greater for smoking cessation programs in the workplace.  Healthier employees tend to use fewer sick leave days and, overall, may save the company money.  Because most preventive health care is now provided at no cost to the consumer, employers and employees may be more willing to participate in health screenings and behavior modification programs
  2. Incentives: This is not a new concept and for a good reason: it works.  The best way to motivate employees to “do better” and steer them away from negative behavior is to reward them for good behavior. Many companies have come up with imaginative and engaging rewards for employees willing to participate in wellness programs.  For instance, one company pays a greater portion of employees’ health premiums for maintaining a healthy BMI or lowering blood pressure.  Other programs have included free health club memberships and iPods. 
  3. Offer a Variety of Healthcare Plans: If there is one takeaway from the Marketplace structure it’s that people like choices.  Many companies offer one health care benefit plan to cover all employees.  Employers may want to reexamine their reasons for doing so and follow the Marketplace’s lead: everyone’s health needs are different and people like choices.  Employees may select benefit plans/coverage that is less expensive for both the employer and the worker. 
  4. HSA/HRA:  A lot can be said for Health Savings Accounts (HSA) yet most consumers don’t take advantage or use them because they don’t understand what they do.  Ultimately, employees spend more money on healthcare coverage than is necessary. Almost 70 percent of US large-group employers offer an HSA and the costs of the plan maybe close to 35 percent less than a traditional plan.  The money is pre-taxed can be used to fund the employee’s HSA account.  It can be used on qualified items such as deductibles, co-insurance and other health related expenses.  Further, the money is also dispersed tax-free too.  Perhaps the greatest reason to consider having an HSA is the employee ownership. Because consumers are spending their own money (as opposed to their insurance company being billed directly for all of the costs), people may be more willing to be an informed consumer and make better choices.
  5. Spousal Coverage:  Want to lower health expenditures for both the employer and the worker? Eliminate spousal coverage. Yes, it is beneficial (and convenient) to workers when their employers offer to cover part of the family premium.  But, in many situations, the spouse’s employer also offers health plan coverage. It is easy to implement a policy stating that if an employee’s spouse has comparable coverage at their place of business, then he/she is not eligible to be covered by your plan. Almost immediately, employers will see a decrease in premium payments as well as in claims. 
  6.  Emergency Room Education: Recently, I spoke with a woman who was suffering from what appeared to be an upper respiratory infection.  When I asked her when she was planning on going to the doctor, my acquaintance replied: “Doctor?  I’m not going to the doctor!  I’ll just go to the Emergency Room when things get really bad.” The average cost of an emergency room visit is more than $2000.  Because the ACA’s focus is on preventive and outpatient care rather than consumers seeking hospital-based services, costs for ER care will increase.  Employers can reduce their healthcare expenses by spreading awareness about urgent-care facilities, pharmacy based clinics, and 24/7 nurse/physician hotlines. They are a better option than running to the ER for medical care.
  7. Discount Drug Programs: This is a big one! According to a recent report form the National Institute for Health Care Management Research and Educational Foundation, “Although expenditures for prescription drugs are still a relatively small portion of overall health care spending (around 9% in 2000), the rise in drug spending in the last few years has contributed disproportionately to an upturn in health care costs and health insurance premiums.” There are ways to reduce the cost of medications by utilizing discount drug programs like the ones offered by pharmaceutical chains. Some employers have implemented a “tiered program” in which employees pay the least for generic drugs than for brand-named medications on the approval (or formulary) list.

The cost of healthcare coverage has skyrocketed over the past decade.  By utilizing some common sense solutions, employers can more easily avoid passing the rising costs onto employees in the form of higher premiums, deductibles and co-insurance. 

 

Sources:

5 Easy Ways to Reduce Your Health-Care Costs, Fox Business, retrieved on December 10, 2013 from http://www.foxbusiness.com/personal-finance/2013/07/02/5-easy-ways-to-reduce-your-health-care-costs/

Employers Look for Ways to Address Rising Health Care Costs, Innovative Employee Solutions, retrieved on December 10, 2013 from http://www.innovativeemployeesolutions.com/knowledge/articles/employers-address-health-care-/

How Employers Can Lower Health Care Costs, Buzzle, retrieved on December 10, 2013 from http://www.buzzle.com/articles/how-employers-can-reduce-health-care-costs.html

The Affordable Care Act’s Impact on Healthcare Marketing, Marketing Profs, retrieved on December 5, 2013 from http://www.mpdailyfix.com/the-affordable-care-acts-impact-on-healthcare-marketing/

 

Renée Keats is a Certified Health Navigator with a Master’s Degree in Public Health from the University of Illinois at Chicago. With over 20+ years of healthcare related experience, Ms. Keats has worked in hospital administration, government, managed care, Medical IT development as well as in other health related settings.  Prior to founding Windy City Momma, she worked for WellPoint as a Project Manager and later a Client Services Manager. When not working with the public to help navigate clients through the complicated world of healthcare, Ms. Keats enjoys sailing, gardening and of course, blogging!  Connect with Renee on Twitter, Linkedin, and Google+.

 

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