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(HealthNewsDigest.com) – The debate around healthcare reform has largely degraded to identifying who will pay the added costs for expanding coverage, rather than first determining a strategy to mitigate the excessive costs that currently plague our healthcare system. President Obama has said that “Healthcare is one of the fastest growing expenses in the federal budget, and it’s one we simply cannot sustain(1).”
Yet Congress plans to increase spending without any apparent commitment to fully reform the way in which healthcare is so inefficiently delivered in this country. In the end, short of reform that effectively mitigates costs, employers and tax payers will continue to bear this unnecessary burden. For this reason alone, it is of vital importance for employers to empower their employees to better manage their own health and care, and to simultaneously challenge the healthcare system to deliver better value. To influence healthcare reform, employers need to be more proactive in contributing to solutions with policymakers. However, empowering employees to be more active partners in their own healthcare is something that employers can and are doing today to reduce their healthcare costs.
How much do businesses have to spend before they do something?
Over the last decade, the average cost of health benefits per employee has grown at five times the rate of earnings (2), and is expected to increase another 9% in 2010 alone. American employers, which cover the healthcare for over half of the population, have a vested interest in reining in rising healthcare spending. It is no surprise then that employers are continually searching for creative ways to reduce their healthcare bill. Cutting back on coverage and shifting more costs to employees is not uncommon. According to a recent survey conducted by PricewaterhouseCoopers, 42% of employers surveyed said they plan to increase employee contributions to their health plan, while 41% said that they expect to increase medical cost sharing through plan design changes. These strategies are marginally effective in the short term, but fail to address the root of the cost problem, merely shuffling the burden to individuals with little political influence.
Atul Gawande’s recent New Yorker article lays bare a reimbursement model that encourages physicians to increase the quantity of services which, in many cases, reduces the quality of healthcare outcomes. The government has recognized the need to undertake fundamental changes, but overhauling a $2 trillion industry that benefits from its own inefficiency will not come easily, and, historically, has proven impossible.
The reality now, and within any new system being proposed, is that employers have the largest stake in healthcare reform and are in the best position to reduce healthcare spending by focusing on the other side of the cost equation: their employees.
Reduce demand and streamline supply
By educating, enabling, and encouraging employees to make better health and healthcare decisions, employers are proactively reducing healthcare costs. Forward thinking companies are already promoting health at the workplace, and the business case is compelling. According to the best available estimates, quality workplace wellness promotion programs show an ROI of 3:1 or more. The logic follows that healthier employees are more productive, absent less often, and incur fewer healthcare costs – not to mention intangible benefits to recruiting, morale, and retention that stem from a corporate culture of health and wellness. Wellness programs are increasingly popular: a recent poll indicates that 88% of employers currently offer some form of program, while over two thirds of these employers are expecting to expand their programs in the near future.
Pitney Bowes, for example, has implemented a comprehensive program called ‘Count Your Way to Health’ that consists of employee education, making the workplace environment more conducive to healthy behaviors, providing financial incentives for healthy lifestyle choices, and demonstrating strong leadership support. Pitney’s healthcare spending is running at about two thirds that of comparable companies.
The Dossia Consortium (of which Pitney Bowes is a founding member) is another example of employers being proactive in addressing rising healthcare spending. Dossia is a non-profit organization created by a group of ten large US companies. Dossia enables employees to aggregate their own personal health information from across the fragmented system and provides them with access and control over this information in the form of a Web-based personally-controlled health record.
By providing employees with tools such as Dossia, employers enable their employees to become more engaged participants in their own health and healthcare. Equipped with the right information, employees can ask better questions, demand better care, and take better care of themselves and their families.
An employee with pre-hypertension can use their personal health system to track changes in their blood pressure and share them with their doctor, receive personalized health messaging, wellness tips and reminders, and review prescription medication options. The number of personalized tools that can be made available is endless. Applications that help employees better manage diabetes, identify exercises to help reduce back pain, plan a healthful diet to maintain a healthy weight, or identify less expensive generic medication options will help mitigate main healthcare cost drivers.
Although about 70% of all healthcare costs stem from illnesses that are preventable with healthy lifestyle, relatively little consideration is given to the role of the individual in the dialogue regarding healthcare cost containment. Employers are uniquely positioned with the financial incentives and organizational capacity to educate, empower, and encourage employees to become more active participants in their health and healthcare.
Employers sign larger and larger checks, assuming that spiraling healthcare costs are beyond their influence. To this day, many employers remain conspicuously absent from the healthcare reform dialogue, and this needs to change. Those employers that have capitalized on the opportunity to contain costs by investing in their employees are seeing results. If other American employers join in we would be a lot closer to addressing America’s healthcare crisis.
(1) President Obama, March 2nd – Announcement of Gov.Sebelius Nomination
(2) Families USA, October 2008
Colin Evans is the CEO of Dossia, a non-profit group, comprised of Fortune 500 companies dedicated to improving US health and healthcare by empowering individuals to make informed healthcare decisions.
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