I worked for a large carrier with product lines in the “non-medical health” space. What our sales associates knew was that health care was king. What employers focused on and what their trusted advisors talked to them about was medical coverage.
The reason for this was health care cost inflation. Eight years ago, Helen Darling, president of the National Business Group on Health asked the marketplace “Do American workers realize that they’re giving up their pay raises to the health care system?” And that was before the bottom fell out of our economy.
For two decades cost hikes for health insurance have outpaced workers wages, consumer price index and what it cost businesses to buy the raw materials to make the widgets from which they derived profit. No wonder they were so obsessed. No wonder they continue to be today.
Employers reached the ceiling of what they were willing (able) to pay around five years ago. Since then the game has been one of cost shifting. Employers are capping health care dollar spend and implementing plan design changes that put risk, responsibility and cost increasingly on workers and their families.
And then there’s health care reform. It is the great catalyst of our era. This is a subject for another blog post, but suffice to say that this PPACA thing looks like a pretty big deal. All of us will need to anticipate what’s next. The questions we need to ask ourselves include: “Who’s going to pay and who’s going to play?” “What happens if Romney wins?” and “What do these health insurance exchanges mean to the (my) business model?”
One thing we can bank on is that for 2014 and beyond, everything will be very different.
What else can we bank on? Baby boomers are getting older, like nobody’s business. (Well, everyone’s business, really!) Health care technology is getting more expensive. There is a finite supply of resources to meet a burgeoning demand for health care services.
In other words, health care costs will continue to increase.
What’s inevitable? To me, a transition from defined benefit to defined contribution in employer health care funding. We saw this in retirement a decade and a half ago. We’re already seeing it in the health care space. PPACA will only accelerate the transition.
Employers are holding the line on health care costs and passing cost increases, greater risks and more responsibility to the workforce. Employers are shifting to high deductible plans (larger employers for now … but how long until smaller employers follow suit?).
My prediction: Employers will increasingly insulate themselves from the ravages of health care cost inflation. Most won’t “get out of the business,” but more and more will embrace a defined contribution mindset. It will have different names. But really, that’s where we’re going.
Of course shifting health care costs to employees has its consequences, and employers recognize that. The more employers shift costs, the more likely employees and their families might forego care because of the cost. Paying for health care coverage buys employee loyalty, without a doubt. But the price tag is forcing difficult decisions.
So will they still care about health?
In a word: yes.
There is a business value to a healthy working population. A healthier workforce has lower rates of absenteeism and presenteeism. A healthier workforce is more engaged and more loyal. All of that matters to any employer, because worker productivity is a foundation of organizational success. Worker productivity is foundational to profitability, plain and simple.
Are you thinking about “productivity” as a value proposition? Will health care reform engineer out the traditional value propositions you use with your customers? (“I can save you 4% on your health plan with a different carrier.”) Are you comfortable with talking about productivity?
Did you know that the 10% of a working population who submits a short term disability claim drives in excess of 50% of the health care costs spent by that population?
Do you speak to how health and wellness programs contribute to employee loyalty?
Are you an expert in disability coverage? Absence management? FMLA?
Are you thinking about wellness and presenteeism? Are you talking the new language of the CFO in a new era when health care costs (or, at least the employer’s price tag) has been relatively contained?
You should be.
Companies that operate in countries with nationalized health care systems (i.e., most industrialized nations of the world) are still concerned about health and morbidity. Why? Because the productivity of their workforce is a paramount concern. Productivity is a universal business driver.
Are you where you should be when it comes to worker productivity? Want something to take to the bank. Bank on worker productivity. Now start thinking.
Leopold, MD, MBA, MPH, is an independent consultant. He can reached at firstname.lastname@example.org or on the web at www.ronleopold.com.
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