We all know U.S. health care is broken. For employers the impact is that employee health care benefits are increasingly and outrageously expensive and are quickly eating away at profitability for most firms. So what is your company doing about controlling health care costs – other than waiting for the slow and uncertain process of government to fix it all for you?
Employee health benefits are considered by most employers to be a frustrating but unavoidable cost of doing business. Most employers are simply paying the increases. Many employers have found ways to save by shifting some of the increasing health care costs to employees. The impacted employees are frustrated as a result. That’s why conventional wisdom asserts that, to be an ‘Employer of Choice’, you have to provide rich (read expensive) traditional employer health insurance, requiring very little if anything out-of-pocket from employees.
A Revolutionary Approach
However, surprising new ways of re-structuring employee health benefits are changing this budget item for savvy employers from an increasingly painful cost and employee-relations problem into a cost-saving investment that dynamically benefits both employees and the company.
To understand how employee health benefits are being restructured in these new ways, consider the old familiar concept of Risk Management. According to Wikipedia (the new font of all wisdom!) “Risk Management is the discipline of identifying, monitoring and limiting risks… In businesses, risk management entails organized activity to manage uncertainty and threats and involves people following procedures and using tools in order to ensure conformance with risk-management policies.”
According to the standard ISO/DIS 31000 “Risk management — Principles and guidelines on implementation”, the process of risk management consists of several steps as follows:
1. Identification of risk in a selected domain of interest.
2. Planning the remainder of the process.
3. Mapping out the following:
- the social scope of risk management
- the identity and objectives of stakeholders
- the basis upon which risks will be evaluated, constraints.
4. Defining a framework for the activity and an agenda for identification.
5. Developing an analysis of risks involved in the process.
6. Mitigation of risks using available technological, human and organizational resources.
Based on results from new best practices in employee health benefits, using these same principles and steps to re-structure your employee health benefits will serve both you and your employees far better than the current standard approach. Traditional ‘health’ benefits are really sickness benefits, focused on providing care after health risks have led to disease. Health risks are rarely if ever even mentioned in traditional health care and wellness plan designs.
Yet CDC reports that 70% or more of all U.S. health care costs are for care of preventable illnesses. CDC states that these illnesses are preventable primarily through improved daily health habits, like getting adequate regular exercise and maintaining a healthy body weight.
Other evidence shows that many people do not get the recommended ‘preventive’ screening they should be getting to detect diseases such as breast and colon cancer in their early more treatable and less-costly stages. More CDC-confirmed research shows that 59% of next year’s high health care costs will come from this year’s low-cost population, as people with high health risks succumb to disease.
The new best-practice employee health benefit designs take these factors into account. Pioneering employers of all sizes have discovered the cost-saving value of offering strong financial incentives to reward employees for managing their health risks.
In case you’re worried about privacy and confidentiality, you should know that the best new programs meet all HIPAA (Health Insurance Portability and Accountability Act) regulatory requirements that protect these rights.
We are not talking here about the tried and failed old worksite wellness programs that were used only by employees who were taking responsibility for their health anyway. We are not talking about carrier-sponsored or other programs that simply refer enrollees to online health information and effectively say ‘good luck’. We are referring to the new employee wellness strategies and programs that far more effectively involve even those with the highest health risks who have not been taking personal responsibility for getting and staying healthy.
Saving on employee health care costs can mean saving jobs or the company itself, or at least making far better use of those funds. As some successful firms have already shown, employers who adopt these worksite wellness strategies reap huge rewards, and so do their employees. Experts agree it’s a new economy. It’s time for businesses to do more than just think outside the box. It’s time for companies to take action to reduce costs or risk losing their competitive advantage and quite possibly their business.
