3 Ways Employers Can Relieve Health Care Costs
Healthcare costs aren't rising as rapidly as they were a decade ago; however, they are still expected to outpace general economic inflation with a 4.5 percent growth rate in 2016, according to a PwC report.
Despite the continued rise in costs, companies have many potential ways to relieve health care expenses while also helping their employees better utilize their healthcare plans. Says PwC, "Employers must pursue strategies that not only strengthen their bottom line but better equip workers to make informed health decisions—or they will likely pay a high cost in the long run."
Here are three ways companies can help mitigate their healthcare costs:
1. Shift to Plans with Higher Deductibles and HSAs
Some employers have been requiring employees to share more healthcare costs in recent years, which has helped keep overall healthcare prices in check. In 2015, four-fifths of covered workers were enrolled in health plans with annual deductibles, and those deductibles have grown 67 percent since 2010, according to the Kaiser Family Foundation.
Companies that haven't done so yet might consider moving to higher deductible plans and then pairing them with a Health Savings Account (HSA) that provides employees with a tax break for money they save and spend toward their health expenses.
2. Improve Employee Education about Health Coverage
Employees have many opportunities to reduce their own healthcare costs, and, in turn, their employers' healthcare costs. But they need to be informed consumers.
"Research demonstrates that uninformed patients are less likely to use preventive services and manage their conditions while being more likely to have unnecessary hospital admissions or visits to the emergency department," healthcare industry expert John Leifer writes on BizJournals.com.
Companies can host employee seminars to teach employees about their health plans and how to reduce their costs—whether that's using urgent care centers more than emergency rooms or understanding how to read their medical bills. More tools are also becoming available that allow employees to better compare costs of care.
Education is also needed when it comes to employer-sponsored wellness programs, according to PwC. "Unless [employees] can be provided with personalized information, and some sort of tangible incentive, the effectiveness of programs such as wellness may fall flat."
3. Look at Newer Options
Some companies are attempting to reduce their healthcare costs by researching the public marketplaces set up under the federal Affordable Care Act (ACA). The Small Business Health Options Program (SHOP) marketplace, created under the ACA, for example, offers plans specifically designed for small companies.
Businesses with fewer than 50 full-time employees, including full-time equivalents, are not subject to the Employer Shared Responsibility provisions for offering insurance. Therefore they have the option of simply doing away with employee health plans, giving employees a raise, and having them buy insurance through the public health insurance marketplace established by the ACA. However, that may come with its own risks. Employees may be upset with no longer having the benefit of employer-sponsored health insurance and they may not know the about the individual mandate which requires them to have adequate insurance coverage. Therefore, if an employer sends its employees to the marketplace, it's important to help employees navigate their options and provide at least basic information about how the marketplaces work.