Methods to Reduce Your Health Care Costs—Without Cutting Benefits
Health-care prices have risen every year for the past two decades. This can happen for a multitude of causes, including inflation or a global pandemic, for example. With this in mind, you may expect healthcare costs to rise again in 2022.
Furthermore, workplaces contribute more than any other single organization in America to reduce health-care costs, improve health, and improve our population's health behaviors.
Moreover, our current medical system focuses on the treatment of diseases. It was designed to treat illnesses, not to prevent, arrest, or reverse them. If you have an illness or other health issues, the American medical system is excellent, albeit very expensive.
In today’s guide, we’ll discuss and learn some crucial ways to lower your healthcare costs without cutting any benefits.
Moreover, discover to save money while still getting the treatment you require. Begin by examining the details of your plan to see what services are offered. Further, use the suggestions below to get the most out of your advantages and save money on your medical treatment.
Let’s check at the content that we’ll cover ahead:
- High-Cost-Of-Health-Care Factors
- Strategic Methods to Reduce Health-Care Costs
- Importance of Wellness Program
- How Deskera Can Assist You?
High-Cost-Of-Health-Care Factors
Following we have listed some factors that led to high cost of healthcare. Let’s learn:
1. The majority of chronic diseases are caused by unhealthy lifestyle choices. These diseases account for over 70% of all fatalities and up to 75% of all medical costs. 70-90 percent of chronic diseases are caused by a lack of physical exercise, poor diet, and tobacco use.
2. The United States has the highest salary and medicine costs in the world. Physicians, nurses, and other healthcare providers in the United States earn more money than their counterparts in other industrialized countries. The cost of drugs has climbed by 27% in one company in the last year. Several media outlets have reported on examples of skyrocketing pricing. The pharmaceutical industry is the new diamond rush.
3. Premium technologies and procedures like MRI and CT scanning are medical wonders with a hefty price tag. Physicians will order these scans because they are afraid of being sued, even if they are generally unnecessary. This is one of the reasons that Americans image twice as much as the rest of the industrialised world.
4. Fragmented treatment describes how many healthcare facilities deliver uncoordinated and unconnected service. Our healthcare system is characterised by several doctors from different locations, incompatible record systems, multiple surgeries, and duplicate lab testing. Duplication of procedures and testing is exacerbated by these circumstances.
5. The term "cost consideration" essentially refers to "cost transparency." Unlike in free market transactions, where a buyer and seller agree on a known price, the majority of medical patients have no notion how much items cost.
Most people never get to see the cost of goods and services because they have insurance, and they do not base their purchasing decisions on price. Because the price is set by the healthcare provider and the insurance company, it is easier to raise charges.
6. Fee for service based on the notion that doctors are only compensated when they provide a service on a patient, such as injecting or removing something. The quantity of services given, rather than the quality of those services, determines financial incentives. As a result, most doctors feel compelled to provide services whether or not they are necessary.
7. High administrative expenses per person per year exceed $1,100. In the United States, just administering health care costs $1,100 per person, excluding the actual cost of providing medical care.
8. The most expensive type of medical treatment is end-of-life care. End-of-life care consumes one in every four Medicare payments. That figure was $125 billion in 2012.
9. Provider consolidation refers to hospitals and physician organisations joining forces in order to gain market share. Because of the diminished competition, each consolidation has a propensity to raise service costs.
Although this list of cost drivers is not exhaustive, it does include the most significant ones. Workplaces may not see or comprehend how these drivers affect healthcare costs, but they are aware that there are policies that may be done to try to halt cost rises.
Strategic Methods to Reduce Health-Care Costs
Following we have discussed some strategic methods on how you can reduce healthcare costs. Let’s learn:
Consider Modifying your Plans
One common strategy for a company to cut benefit costs is to raise employee charges. This may be done quickly through premium increases, but it could generate greater problems for employers.
As a result of the COVID-19 pandemic, many employees are still having financial problems and are eager to leave their jobs in quest of better benefits possibilities.
Given this, alternate plan modeling might be a more thorough way to cut costs. Employers may want to look at different healthcare plans that might still benefit employees without costing too much. Modeling options for plans include:
- High-deductible health plans have reduced premiums than typical health insurance, due to consumer-driven health plan models.
- Employer-sponsored health plans, rather than carrier-managed plans, are self-funding arrangements.
- Establish Spending Limits on Shoppable Services Using Reference-Based Pricing Models: Self-funded health plans with pre-determined spending caps.
- Self-funded health plans are those in which a business pays a set number to a carrier each year and then receives the remainder if there are any funds leftover at the end of the year.
Depending on a company's conditions, each of these plan modeling options has its own set of benefits and cons.
Control Drug Spending
The cost of drugs is rising faster than the cost of any other medical healthcare service or product. According to GoodRx, prices are 33 percent higher than they were in 2014.
However, this is especially problematic during inpatient treatments when patients aren't frequently offered the option of choosing a generic prescription and aren't told what pharmaceuticals they're given until afterward.
Due to medical choices, employees may be supplied name-brand medications even in standard prescription scenarios.
Furthermore, employees can be educated on the cost disparities between name-brand and generic drugs. Employees will be able to see that they may save money while still obtaining the same level of service.
Moreover, employers or supervisors may also consider providing various levels of prescription coverage to their employees. For example, fully providing generic prescriptions or medications needed to treat chronic illnesses.
Also, employers may cover less of the expenditures at higher levels (e.g., specialty pharmaceuticals). Furthermore employers must ultimately select the proper coverage levels for their own workplaces.
Healthcare Education
In recent years, there has been a tremendous increase in employee health care literacy. Individuals should be able to save money and improve their health by having a greater grasp of their healthcare options.
In 2022, even a low level of health literacy can dramatically reduce healthcare costs. Workers who receive assistance with issues like "How much will this cost?" and "Can I be operated on for less money but get the same results?" may be able to better manage their medical choices and make better-educated judgments.
Employees should be taught the distinctions between urgent care and emergency facilities, as well as how to shop for services at the best price.
Ultimately, the more health-related knowledge employees have, the more money they might possibly save. In other words, the knowledge that businesses invest in now will pay off later in the form of healthier employees and lower healthcare expenditures.
Telemedicine Choice
Telemedicine allows patients to consult with their doctors over the call or via the internet. Surprisingly, it became quite popular during the COVID-19 pandemic, when people were frantic to contact their doctors.
Furthemore, this level of popularity is unlikely to wane in the coming years. Instead, more businesses are likely to shift their focus to telemedicine. Only 11% of US citizens used telemedicine in 2019, according to McKinsey & Company.
According to a recent McKinsey & Company survey, 46 percent of customers were utilizing telemedicine to replace in-person health appointments as of mid-2021.
In a separate McKinsey & Company survey, 76 percent of respondents stated they were interested in utilizing telemedicine in the future.
Employers who want to try out telemedicine could do so in a restricted capacity. An employee may visit the doctor in person for a yearly checkup and then return for a virtual appointment later. Moreover, employers may consider expanding their telemedicine services if employees find this service valuable.
Promote Active Benefits Participation
Employers can help lower overall healthcare costs by encouraging employees to participate in their own treatment. Staff should be able to learn more about health, research treatments, and compare costs.
According to a new hospital price transparency law that takes effect on January 1, 2022, price comparison shopping may be easier in 2022.
Employees will now have access to complete pricing information for activities and other services. As a result, employees are urged to educate themselves before making costly health decisions.
Consider Virtual Health Choice
Virtual solutions can give high-quality results, according to one of the most significant lessons learned from the COVID-19 outbreak. This is so accurate that many businesses now allow employees to work from home on a regular basis. This tendency is also seen in virtual health solutions.
We now rely on technology much more than we did previously. As a result of increasingly remote workforces and social distancing procedures, we know that employee benefits communications, particularly open enrollment, must now be predominantly digital.
We have become even more dependent upon technology than before.
Moreover, we also recognize that, due to increasingly dispersed workforces and social distancing techniques, employee benefits communications, notably open enrollment, must now be primarily digital.
These days, there are a plethora of telehealth programmes to choose from. Individuals can interact with healthcare providers in only a few clicks, with no need to wait in lines or go to a clinic.
Individuals will also be able to work more efficiently because they would not have to take as much time off. As a result, telehealth solutions are frequently less costly than traditional in-person doctor visits.
The Centers for Medicare and Medicaid Services (CMS) recognizes the value of telehealth services and is working to make them more widely available.
Furthermore, employers should think about including telehealth services in their benefit plans. It will be more cost-effective for workers to arrange a virtual health consultation before an in-person session in some instances.
In any case, having a telemedicine option increases care access while cutting costs.
Alternatives to Plan Funding Should be Considered
Restructuring how health plans are funded is a more drastic strategy for lowering health expenses. For example, a self-funded plan may be less costly than paying a hefty premium for a fully insured plan.
Level-funding and reference-based pricing models are two further choices, each with its own set of administrative procedures and legal limits.
Funding selections should not be treated lightly and therefore should depend on a set of variables such as the size of the organization, its risk tolerance, and its income stability.
Furthermore, employee financial stability should be considered as well, especially while the COVID-19 pandemic's consequences are still being felt. Large premium increases may be difficult for employees to bear, limiting some plan financial flexibility options.
Employers have traditionally pushed costs onto their employees (typically through higher premiums) in order to cut costs. However, in 2022, this trend is not likely to be common.
Moreover, employers will be hesitant to shift too much of the burden due to the tight labor market and the fact that many people are struggling financially as a result of the outbreak.
In addition, employees may look for other jobs or just avoid preventative care as a result of this, which can lead to chronic diseases and greater future healthcare expenses.
Provide Carryover Savings Accounts
Every year, healthcare programs with savings features become extremely popular. These tax-advantaged savings accounts are growing more popular as they help employees to better regulate their spending and improve their health literacy.
Also, a range of options is available, namely flexible spending accounts (FSAs), health savings accounts (HSAs), and other accounts.
Money can be carried over from year to year in many accounts, or you might include that function in your plan designs. Because the money isn't going "use it or lose it," allowing carryover motivates employees to contribute further.
Because many companies will match deposits up to a certain amount, the more money placed into these accounts, the more money everyone saves.
Revisions to the Prescription Drug Policy
Prescription drug coverage is a terrific addition to health plans, but if not used appropriately, it can increase costs. Employees, in particular, will need to be taught about their drug plan, or they risk wasting money.
For example, if an employee lacks sufficient expertise, they may choose name-brand medicines every time they require one.
The employee may not even be aware that generic alternatives, which are similarly effective and substantially less expensive, exist. Moreover, individuals and their employers may face higher prices as a result of this.
Employers, in addition to education, can help limit unnecessary drug spending by modifying their policies. Employees may be required to request generic prescriptions first before being covered for more expensive options.
Importance of Wellness Program
To put it simple way, workplace health initiatives assist employers in avoiding excessive health-care expenditures by assisting employees in staying healthy and out of the healthcare system.
Many of the determinants of healthcare costs are unaffected by workplace health programmes, but they can influence unhealthy behaviors, which is why one of the key benefits of wellness is cost reduction.
Employees' health is improved and chronic diseases are avoided by assisting them in adopting and maintaining healthy practices. The expense of health care is considerably lowered with the absence of chronic disease. This rationale may be questioned by sceptics, but it is exactly what happens.
Furthermore, workplaces who implement a successful wellness programme will see lower health-care expenses. They have better health practices, reduced health risks, and much lower health-care expenses as a result of their efforts.
Johnson & Johnson's Wellness Program, for example, proved a long-term benefit on health-care cost containment by tackling high blood pressure and cholesterol concerns through policies, atmosphere, and awareness. During a four-year trial, Johnson & Johnson reduced medical costs by around $225 per enrolled employee per year.
Frequently Asked Questions (FAQs) Associated with Healthcare Costs
Following we have discussed some crucial frequently asked questions (faqs) that are associated with healthcare costs. Let’s learn:
Que 1: What Is the Average Cost of Health Care?
Ans: The average monthly cost of health insurance in 2020, according to eHealth, was $456 for individual people and $1,152 for families. These expenses, however, vary according on your age, location, general health, and plan type.
Que 2: What Causes Health-Care Costs to Be So Expensive?
Ans: Health-care prices and spending are rising in the United States, putting pressure on family and company budgets.
Moreover, the rise in chronic diseases, poor diets, and expensive pharmaceutical treatments and procedures are three major drivers boosting health-care expenses in the United States.
Que 3: Are Wellness Programs a Good Investment?
Ans: According to a research released in 2019 by the International Foundation of Employee Benefit Plans, most firms in North America saved between $1 and $3 in health-care expenditures for every dollar spent on employee wellness programmes.
So, enrolling in the wellness program is a good investment.
How Deskera Can Assist You?
As a business, you must be diligent with the employee payroll system. Deskera People allows you to conveniently manage payroll, leave, attendance, and other expenses. Generating payslips for your employees is now easy as the platform also digitizes and automates HR processes.
Final Takeaways
Now that we've reached the end of this extensive guide, we've developed a summary of crucial sections for your future reference. So, let's get started:
- Most people never get to see the cost of goods and services because they have insurance, and they do not base their purchasing decisions on price. Because the price is set by the healthcare provider and the insurance company, it is easier to raise charges.
- One common strategy for a company to cut benefit costs is to raise employee charges. This may be done quickly through premium increases, but it could generate greater problems for employers.
- Employees can be educated on the cost disparities between name-brand and generic drugs. Employees will be able to see that they may save money while still obtaining the same level of service.
- The more health-related knowledge employees have, the more money they might possibly save. In other words, the knowledge that businesses invest in now will pay off later in the form of healthier employees and lower healthcare expenditures.
- Telemedicine allows patients to consult with their doctors over the call or via the internet. Surprisingly, it became quite popular during the COVID-19 pandemic, when people were frantic to contact their doctors.
- Employers who want to try out telemedicine could do so in a restricted capacity. An employee may visit the doctor in person for a yearly checkup and then return for a virtual appointment later.
- Virtual solutions can give high-quality results, according to one of the most significant lessons learned from the COVID-19 outbreak. This is so accurate that many businesses now allow employees to work from home on a regular basis. This tendency is also seen in virtual health solutions.
- Individuals will also be able to work more efficiently because they would not have to take as much time off. As a result, telehealth solutions are frequently less costly than traditional in-person doctor visits.
- Funding selections should not be treated lightly and therefore should depend on a set of variables such as the size of the organization, its risk tolerance, and its income stability.
- Money can be carried over from year to year in many accounts, or you might include that function in your plan designs. Because the money isn't going "use it or lose it," allowing carryover motivates employees to contribute further.
- Employers, in addition to education, can help limit unnecessary drug spending by modifying their policies. Employees may be required to request generic prescriptions first before being covered for more expensive options.
- Workplaces who implement a successful wellness programme will see lower health-care expenses. They have better health practices, reduced health risks, and much lower health-care expenses as a result of their efforts. This evidence can be found here.