Monday, November 30, 2009
Opinion: Why health care costs keep going up
Chris Mullins: In addition to inflation, there are a number of trends that continue to drive health care costs up, despite the best efforts of employers, consumers, health care professionals and insurance companies to cut them.
Recent studies by Towers Perrin and Hewitt Associates both project 2009 health care cost increases to be around 6 percent nationally. Although that is less than the double-digit increases we’ve seen in recent years, 6 percent still may sound like a lot.
As we await the outcome of health care reform, we are struggling in these tough economic times with rising health care costs that are having a bottom-line impact on businesses of all sizes. As a local executive for a national health insurer, however, I know that there are real, structural reasons these costs increase every year, and that addressing the causes of health care inflation is a daunting task.
Let’s start with the bigger picture. We recognize that a large part of the increase in health care costs this year is inflation, which most experts say will run 5.6 percent, fueled by the dramatic increase in energy costs for much of the year. When you take overall inflation into account, the real increase in health care is not as high as it seems at first blush.
In addition to inflation, there are a number of trends that continue to drive health care costs up, despite the best efforts of employers, consumers, health care professionals and insurance companies to cut them:
Unhealthful lifestyles. There continues to be an increase in conditions such as diabetes, heart disease and some cancers related to unhealthful lifestyles and obesity. The total bill for delivering health care in our country would decline dramatically if more Americans adopted healthful habits.
An aging population. The population is aging, and the elderly tend to need and use more health care resources.
The economy. Several studies have shown that many people with chronic conditions stop taking or take smaller doses of medication or forgo other care because they can’t afford it. This results in greater overall costs when patients deteriorate and need more expensive treatments.
Use and overuse of medical technology. New technologies improve medical care but also drive up the cost of caregiving. MRIs are often ordered by a provider instead of a traditional X-ray, which may provide all the information needed at a lower cost and with much less radiation for the patient. There is also a medical arms race with hospitals and many medical practices investing in the latest, and often most expensive, imaging machines.
It will be a challenge to slow or reverse these trends in the short term. But we want to help.
There are some actions that employers and employees can take today to reduce the cost of their health care. For example, businesses can offer employees incentives to shift to the combination of a high-deductible health plan and a health savings account. A recent study of employers offering UnitedHealthcare plans indicated that an HSA program provides a 10 percent to 12 percent cost savings over a four-year period, in part due to greater use of preventive care.
Employers can encourage workers to use generic drugs, which usually have the same components as brand-name drugs but cost less. Pill splitting (on certain drugs) is another option that saves individuals money.
Engaging employees in work site wellness programs not only can address the lifestyle issues but can raise morale. Healthier employees have less absenteeism and presenteeism, which are also real costs for companies.
In fact, research shows that for every dollar invested in work site health promotion, there is a medical cost savings of $3.48 and an absenteeism cost savings of as much as $5.82. Healthy employees offer companies a competitive advantage, with increased retention and lower medical costs.
There is no quick solution, but employers can take action to help lower the cost of health care. And in the process, employers and their employees will play an important role in making quality health care more affordable and accessible for all.
(Chris Mullins is a senior vice president of UnitedHealthcare of the Mid-Atlantic.)
As we await the outcome of health care reform, we are struggling in these tough economic times with rising health care costs that are having a bottom-line impact on businesses of all sizes. As a local executive for a national health insurer, however, I know that there are real, structural reasons these costs increase every year, and that addressing the causes of health care inflation is a daunting task.
Let’s start with the bigger picture. We recognize that a large part of the increase in health care costs this year is inflation, which most experts say will run 5.6 percent, fueled by the dramatic increase in energy costs for much of the year. When you take overall inflation into account, the real increase in health care is not as high as it seems at first blush.
In addition to inflation, there are a number of trends that continue to drive health care costs up, despite the best efforts of employers, consumers, health care professionals and insurance companies to cut them:
Unhealthful lifestyles. There continues to be an increase in conditions such as diabetes, heart disease and some cancers related to unhealthful lifestyles and obesity. The total bill for delivering health care in our country would decline dramatically if more Americans adopted healthful habits.
An aging population. The population is aging, and the elderly tend to need and use more health care resources.
The economy. Several studies have shown that many people with chronic conditions stop taking or take smaller doses of medication or forgo other care because they can’t afford it. This results in greater overall costs when patients deteriorate and need more expensive treatments.
Use and overuse of medical technology. New technologies improve medical care but also drive up the cost of caregiving. MRIs are often ordered by a provider instead of a traditional X-ray, which may provide all the information needed at a lower cost and with much less radiation for the patient. There is also a medical arms race with hospitals and many medical practices investing in the latest, and often most expensive, imaging machines.
It will be a challenge to slow or reverse these trends in the short term. But we want to help.
There are some actions that employers and employees can take today to reduce the cost of their health care. For example, businesses can offer employees incentives to shift to the combination of a high-deductible health plan and a health savings account. A recent study of employers offering UnitedHealthcare plans indicated that an HSA program provides a 10 percent to 12 percent cost savings over a four-year period, in part due to greater use of preventive care.
Employers can encourage workers to use generic drugs, which usually have the same components as brand-name drugs but cost less. Pill splitting (on certain drugs) is another option that saves individuals money.
Engaging employees in work site wellness programs not only can address the lifestyle issues but can raise morale. Healthier employees have less absenteeism and presenteeism, which are also real costs for companies.
In fact, research shows that for every dollar invested in work site health promotion, there is a medical cost savings of $3.48 and an absenteeism cost savings of as much as $5.82. Healthy employees offer companies a competitive advantage, with increased retention and lower medical costs.
There is no quick solution, but employers can take action to help lower the cost of health care. And in the process, employers and their employees will play an important role in making quality health care more affordable and accessible for all.
(Chris Mullins is a senior vice president of UnitedHealthcare of the Mid-Atlantic.)
