According to the Institute of Medicine, 30% of healthcare dollars are wasted, and since most Americans receive healthcare benefits from their employer, the opportunity for American businesses to solve one of our biggest challenges is immense.
Although controlling healthcare costs has become a recent priority of corporate titans Amazon, Apple, and GM, little attention has been paid to a small but growing number of employers who have already succeeded in this area.
Before we celebrate their victories, lets first contextualize the state of healthcare in America.
- Health Insurance inflation is one of the primary drivers of wage stagnation – RAND Corp, 2013
- Medical bills are the leading cause of bankruptcy. This is despite nearly 75% of claimants having health insurance – Nerd Wallet, 2016
- Consumers feel more positive about their Cable Company than their Health Plan – Temkin Experience Ratings 2016
- In 2018, the average cost of employer-sponsored coverage for a family of 4 is $28,166/year and is increasing $100/month – Milliman Medical Index
- Healthcare benefits are typically an employer’s second or third largest expense – www.cfo.com
- About 18% of domestic spending goes towards healthcare (up from 5.6% in 1965) – CMS
While sobering to pundits and politicians, this information comes as no surprise to the American worker who, for decades, has been getting squeezed by ever-rising premiums and out-of-pocket expenses.
Yet, despite the sickly state of American healthcare, employers willing to challenge the status quo are yielding impressive results.
Our first three case studies were provided by Rich and Bryn Scarborough at the Florida Healthcare Consortium:
Gator’s Dockside (65 employees)
“After joining the Florida Healthcare Consortium in 2016, we were able to enhance our benefit program while stabilizing employee contributions. In late 2018, we implemented an “open” network that eliminates traditional provider restrictions. The new model has saved us $38,600 over the past few months.” – Sandra Clark, Director, Gator Group
Blue Ox Enterprises (120 employees):
“By moving to a self-funded captive program, we reduced our healthcare spend by 25% in the first 12 months. Unlike many of our peers, we pay for 100% of employee (only) coverage, and these saving also allowed Blue Ox to offer a voluntary onsite mobile Wellness Initiative at no cost to employees. Almost all of our employees have used the onsite wellness benefit.” – Aimee Kilpatrick, Controller, Blue Ox Enterprises
McCoy Federal Credit Union (220 employees):
“After being fully insured for over 30 years, McCoy Federal Credit Union moved their healthcare program to a self-insured platform in 2014. Since then we have seen a savings of over $1.2 million dollars in the first 48 months. The self-insured program has not only given us much greater control over our healthcare dollars, it has also allowed us to improve the healthcare benefits to our employees by adding a private direct primary care healthcare facility for our employees. The result has not only been happy employees, but healthier employees as well, which is our goal.” – Tod Mazzocco Executive Vice President.
Our last two case studies come from Dave Chase’s book “CEO’s Guide to Restoring the American Dream: How to Deliver World Class Health Care to Your Employees at Half the Cost”:
City of Milwaukee (6,500 employees): By creating financial incentives that guide employees toward high quality providers and launching an onsite clinic, the City saved $37 Million dollars a year from 2012 – 2016. Controlling healthcare costs has allowed the city to raise wages, improve health outcomes, and reduce the pressure to increase taxes.
Pittsburgh (Allegheny County) Schools (48,000 employees): By creating financial incentives for employees to get care from high-quality providers, the health plan cut its hospital spend by 36.8% in 2016. Their enhanced model has removed the burden of deductibles and nearly eliminated copays for care. In contrast to neighboring school systems, Pittsburghstudents enjoy class sizes that are 30% smaller, and teachers receive higher wages than their peers in Philadelphia.
As you can see, the net result of employers actively engaging to optimize their healthcare spend is life changing. These efforts not only improved the physical and financial health of employees, they also gave employers a competitive advantage in pursuing corporate goals.
Employees who are tired of seeing their paychecks eroded by health insurance increases should send this article to their employer and let them know that under the right guidance, companies are able to reduce their healthcare spend.
In the 2018 midterm elections, “healthcare” was cited as the number one issue facing Americans. And for good reason: when you compile taxes paid for Medicare and Medicaid, health insurance premiums, and out-of-pocket medical expenses, it equals 30% of the average American’s lifetime income.
Luckily, innovative companies have already demonstrated their ability to break the straightjacket of American healthcare and cure much what ails our American dream.
By Donovan Pyle, CEO of Health Compass Consulting in Orlando, FL