How Your Health Care Premiums Are Spent (and How Healthcare Consumerism Can Help)
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How Your Health Care Premiums Are Spent (and How Healthcare Consumerism Can Help)

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Premiums Are on the Rise & Here’s How They’re Being Spent

Recent data shows that the vast majority – more than 80% – of health care premiums are spent on four things:

  • Prescription drugs
  • Doctor services
  • Office & clinic visits
  • Hospital stays

The largest component of these is prescription drugs, accounting for 23.3 cents out of every health care premium dollar.

Why Is So Much Spent on These Four Things?

The relevant question for employers is, why? Once the root cause behind this trend is understood, companies and organizations can make changes to ensure the trend doesn’t apply to them, so far as they can help it.

So, why are these four components responsible for such a large portion of health care premium spend? The primary answer is both simpler and more complex than you might imagine: A lack of healthcare consumerism.

Healthcare consumerism refers to an overall approach to health care benefits that sees them as a consumer good, meant to be “shopped for” like any other consumer good. Moreover, this approach also emphasizes the proactive involvement of the consumer in their own health care. Following this approach therefore means both finding the best price for care and working to prevent the need for costly items like prescription drugs to begin with.

Put most simply, it is the absence of this healthcare consumerism approach that is behind the cost trend in question.

How Healthcare Consumerism Can Help

Of course, understanding a problem is generally easier than actually solving it. Even if employers understand that they should strive to promote healthcare consumerism among their employees, that’s not the same as knowing how to do this, let alone actually doing it.

With this in mind, here are just a few basics when it comes to making healthcare consumerism part of your employee benefits strategy:

  • Emphasize preventive care.

    Data shows that many employees do not get an annual exam, even though they’re free under most benefits plans. By getting a regular annual exam, health problems can be discovered earlier, making treatment generally easier, more effective and less costly.
  • Prescriptions should be seen as a “last resort.”

    Along the same lines, employees often wait too long to address a health care concern, too often making costly prescription drugs the first response to a problem, rather than the last.
  • Partner with the right advisor.

    A good employee benefits advisor can help with preventive tactics, such as wellness programs and initiatives, and educational resources. Moreover, the right advisor can help you continue this healthcare consumerism approach when the time inevitably comes for your employees to “shop” for care and prescription drugs.

Making the Complex Simple

Most health care premiums are spent on just four things. With healthcare consumerism and the right advisor, your company or organization can respond to this trend effectively.

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