How Employee Health Insurance is Breaking the Bank For American Businesses – and How To Deal With It
The policy talk in Washington these days is all about two things: 1. Affordable Care Act repeal and 2. Corporate Tax Cuts. But whatever your viewpoint on these issues, both ignore the elephant in the room (ahem); the growing burden on businesses faced by employee health insurance costs.
Never one to miss opportunity to stay ahead of a trend, Warren Buffet discussed this subject at Berkshire Hathaway’s annual company meeting. Buffet was characteristically blunt about the scale of the problem, and sought to emphasize this as a priority for business well above floated cuts to corporate tax rates.
According to the World Bank growth in National Health Expenditure (NHE) as a percent of GDP in the United States outpaced that of other wealthy OECD members by 30%, from a baseline percent of NHE expenditure in 1995 already much higher at 13.1% of GDP verses 9.2%. By 2014 – the most recent year with data currently available - the gap between US-OECD members had increased to 17% verses 12%.
National Health Expenditure as a percent of GDP; in green the U.S. and OECD Average in blue.
Worse still, all else being equal by 2025 the U.S. Centers for Medicare & Medicaid Services projects the NHE rate for the United States to grow to above 20%. As employers struggle to keep to grips with shouldering much of these costs, that could represent a disaster for American businesses’ global competitiveness, and at home do significant harm to the health of company bottom lines.
An issue that should unite Republicans and Democrats alike is the need for a comprehensive plan to tackle cost inflation in healthcare; particularly in the areas of prescription drug costs, oversight of compensation for medical professionals and to affiliated unions, and sensible reform of regulation across all aspects of healthcare. An overseer body with real clout to research, recommend and (perhaps) even enact measures to restrain runaway NHE would also go a long way towards addressing the issue.
What can businesses do themselves?
Whilst those of us aware of impending healthcare cost calamity watch Washington (maybe) tackle the issue with bated breath, we must be vigilant as to what steps business owners can themselves take to deal with the costs of providing employee health insurance.
Unavoidably business owners will see skilled and salary staff often expect employer health insurance plans, or risk losing out to the best available talent. There is no silver bullet to reducing the cost of health insurance plans, but the closest thing to that is almost certainly strong forward planning. With this in mind here are some of the top suggestions we have for tackling health plan costs head-on:
Negotiate, negotiate, negotiate. All too often firms can be under the misguided opinion that insurer rates are set in stone. The threat take your business elsewhere, through bluff or offer matching, done well this approach can be a great way to play insurers off against each other to get the best deal. Never let apathy get in the way of getting the best deal available every year – done effectively savings will make it worth the effort.
Under the Affordable Care Act small business can make use of the Small Business Health Options (SHOP) exchange. Keeping on top of new procedures like this, and the seemingly never-ending expansion of options and approaches new technologies present can help give your business and edge. Look at the government portal to see if your business qualifies.
Reviewal of plan costs by financial professionals can let you know whether your employees are better off or not with individual plans – especially when government subsidies for individuals are available to them. If this change makes sense for employer and employee, both parties might stand to split the savings and still be content with the outcome.
Keep fit, stay strong - implement a best practice policy to keep employees healthy – there are methods to suit nearly any business type. Standing desks, company organized workout groups, stronger health and safety procedures for your business, subsidies for gym membership, cancer-screen incentives and smoking cessation programs – the list goes on. The US Department of Health and Human Services reported that such steps can save $3.93 on average for every dollar invested. Strengthen employee loyalty and long-term productivity, whilst maintaining a healthier workforce pool.
Do your homework. These are but a few of the many available options and approaches to get the best health plan solutions for your business. There is plenty of material online for those willing to look for it, and for those who want to get serious about restraining cost and expanding the health and vigor of their business, look into what the expertise of an outstanding business consultant can provide.