It’s no longer surprising to hear about the rising cost of healthcare. Employers have been searching for ways to control these expenses for some time now. The good news is that your employees might be the answer you’re looking for. By engaging, educating, and incentivizing them, you can make a significant impact on your healthcare spending.
It’s a common misconception that insurance carriers are to blame for the rising cost of healthcare. However, the consumption of goods and services is the primary driver. If employees avoided going to the doctor or requiring prescriptions, healthcare costs would be close to zero (although there is a fixed cost element that can’t be avoided). Since consumption can never be zero, there are ways to control costs. In my finance days, I learned that healthcare costs boil down to a simple equation: rate times volume equals total cost. It’s essential to help employees understand that their actions, or lack thereof, affect both elements of the equation.
The volume of healthcare consumption is closely linked to an individual’s overall health and well-being. By promoting a company wellness program, encouraging proactive self-care, maintaining a healthy weight, avoiding smoking, and seeing a physician annually, employees can significantly reduce their healthcare expenses. Health-conscious individuals tend to consume less healthcare resources. Therefore, it is essential to motivate your employees to participate in your company’s wellness program and offer meaningful financial benefits to positively impact their behavior.
Now that we’ve tackled the volume aspect in our equation, let’s shift our focus to the rate side. If we’re being honest, comprehending medical costs and pricing is no easy task. How many times have you asked a healthcare provider for the cost of a service, only to be met with “Our billing department handles that, I’m not sure”? And when you do contact the billing department (if you dare), the response is usually “It depends on your insurance.” It can feel like you’re dealing with a pushy car salesman, but it shouldn’t be this way.
Fortunately, the industry is recognizing the need for better healthcare education and has begun offering new tools to answer basic questions. It’s crucial to communicate and educate employees on their healthcare choices, as it directly impacts the cost of their healthcare. For instance, an MRI can cost $3,000 at a local hospital and $800 at a standalone MRI clinic. Many employees are unaware of this significant price difference and how it directly affects their deductible and co-insurance. By understanding their options, employees can make informed decisions that can impact not only the cost of their healthcare but also the plan costs and premiums for all. Educating employees on their healthcare choices is critical.
It’s no secret that healthcare costs are increasing, but what you might not know is that your employees can be the solution to this issue.
To learn more about how to educate and engage your employees, contact a Marsh McLennan Agency (MMA) advisor.
