Business's role in health care costs - column

Business's role in health care costs

Big business is greatly concerned about health care costs, and rightly so. The nation's health care bill has soared to nearly $600 billion - about $2,400 per person. It has been climbing at twice the rate of inflation for several years, and the U.S. Department of Commerce's 1990 U.S. Industrial Outlook predicts 10 percent to 14 percent increases each year for at least the next five years.

Frustration is understandable

Employers who have provided benefits to their work force for years feel trapped beneath the strain these benefits place on their balance sheets.

Employer's frustration is understandable given these recent trends: * Efforts to increase employees' contribution to health benefits have been met with howls of protest and, in some cases, rancorous labor disputes. * Cost containment programs that transfer care from inpatient to outpatient settings have yielded only limited savings. * Self-insurance has not proven to be a solution, as health care costs for self-insured companies rose 18 percent in 1989, according to a survey by the Self-Insurance Institute of America.

There are no easy answers. Still, real progress has been made in a relatively short period. For example, over the past 15 years, benefits managers have become much more aggressive in their pursuit of savings and are much more involved in benefits design, utilization review, and data analysis. Some are forming their own PPOs and negotiating their own discounts.

Meanwhile, insurers have moved from coaxing and voluntary programs to become tough negotiators and developers of innovative programs to manage health care costs and obtain a defined standard of quality. In addition, length of stay has been reduced, selective contracting with providers has achieved better prices, and employees and employers are being informed about the most effective and efficient benefits options.

But we're not there yet. Further progress is needed before we can hope to take some air out of the ever-expanding health care cost balloon. And by doing several things, the business community can play an important role in these efforts to provide affordable, sufficient coverage.

Attitudes must be changed

First of all, business must help change attitudes and expectations among employees. The generous, first-dollar coverage packages previously offered to employees fueled both costs and expectations. While health care coverage should continue to be a valuable employee benefit, employers must educate workers to the reality of medical care cost inflation. Financial incentives, information about health promotion, and benefits designed to emphasize wellness are available to bring more shared responsibility into play.

Employers can influence expectations by helping employees understand that no amount of creative financing solutions are going to make a dent in the health care cost problem until we realize the importance of healthy lifestyles.

The savings could be tremendous. For example, one Blue Cross and Blue Shield plan has estimated that nearly one-fifth of its claims are for illness or injuries that could be prevented. The potential savings amounts to between $30 million and $35 million.

Working with employers, we're moving toward a greater emphasis on disease and injury prevention. A growing number of Blue Cross and Blue Shield plans are offering discounts for non-smokers, seat belt wearers, and motorcycle helmet wearers.

Provider incentives are also being created. The concept of managed care - reflected in a variety of approaches - is an illustration of the strategy to reward the most efficient, best quality providers.

Selective contracting with providers has this potential and must be balanced with the employers' concern about employee access to care. The mechanisms to maintain this balance exist and are being deployed.

We all share in the responsibility to make changes where necessary in order to have more affordable, quality care. We have learned that too heavy a hand to contain costs, without regard for quality of access, will have serious consequences.

COPYRIGHT 1990 A Thomson Healthcare Company
COPYRIGHT 2004 Gale Group