Rising health care costs continue to be a major concern for any company or organization that offers health benefits to its employees.
Record Health Care Costs, Flat Utilization, Lackluster Results
According to the U.S. federal government, Americans spent $3.65 trillion on health care in 2018. This is a record amount – by far the largest in the world, and larger by itself than the GDP of countries such as Canada and Brazil. Moreover, our health care costs have been rising for years, and every indication is that they will continue to do so.
Not only is health care spending in this country at a record high, indications are that utilization is comparatively flat. In other words, we’re spending more for about the same amount of care.
But here’s perhaps the biggest problem: Even though we spend the most in the world on health care, our actual level of health ranks 27th in the world. This issue is made worse by two interrelated trends:
Consumers, already paying record prices for health care that all too often does not improve health, also cannot expect to consistently pay the same amount for the same procedure or the same prescription drugs.
For example, a recent Consumer Reports survey found prices for five popular generic drugs ranging from $66 to $928, from an online mail-order distributor and a local chain pharmacy, respectively. That’s a price disparity of more than 1,300%!
When it comes to medical procedures, data again indicates price swings of more than 1,000%, even in the same city. In one example, a head/brain CT scan cost $224 at one location and nearly $3,000 at another, despite the locations being mere miles apart.
No Guarantee of Quality
Similarly, consumers can also expect no consistency when it comes to quality of care, even when wild pricing disparities are also present.
One unbelievable example should bear this out: If you have orthopedic back or neck surgery at the University of Texas Southwestern Hospital, you’ll be charged a $20,952 facility fee. The same fee for the same procedure at the Medical Center of Plano, also in Dallas, Texas, is $81,114. That’s 287% more, even though the University of Texas Southwestern Hospital has a higher quality rating for such a surgery.
How Employers Can Respond to Record Health Care Costs
Many employers at this point may feel powerless against such trends. How could we possibly affect country-wide trends involving costs, utilization rates and quality of medical care?
Obviously, we cannot necessarily impact the trends themselves, but there are things you can do as an employer to help create more positive outcomes for your people. For example:
Making the Complex Simple
Health care costs are up, but so are pricing and quality disparities. With the right approach, any business or organization can soften the local effects of these trends and help create more positive outcomes for its employees.