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Consumer Is Key To Health Costs
And Kyle Hodges, vice president of employee benefits for The Campbell Group, said it is no secret, either, that this cost is businesses’ second largest expense next to payroll.
So what can companies do to manage such costs?
Hodges told the Business Journal that the answer lies in charging employees a higher deductible, thus making them more financially accountable for their own health choices.
He said the first step in looking at health care cost control is understanding why health care costs rise and what would and wouldn’t be smart solutions to the problem.
Costs rise, he argues, because Americans demand the best care possible, giving no consideration to cost and minimal consideration to their own personal health habits.
“Our entrepreneurial society wants to spend its money on the best cures, the best technology for surgery and the best drugs for their ailments,” Hodges said.
“And why wouldn’t they want the cure for cancer, to walk out of a hip surgery the very next day or a pill to lower their cholesterol?
“But this isn’t going to drive our costs down,” he added, “and employers have to stop spoiling their employees with these low deductibles.”
He said the approach to health care requires deepening the financial involvement the employee has in his or her own health care costs.
Too, he said a great many Americans lead unhealthy lifestyles because they have been able to rely on their health insurance to pay for correctives to the subsequent health problems.
Hodges said the only incentive people have to keep themselves healthy or be more proactive in caring for their own health is financial.
He explained that raising the deductibles on group health insurance profoundly reduces premiums.
“And there are three different ways, each with their advantages and disadvantages, where employees could save money for the cost of their health care needs.”
- The Flex Spending Act (FSA) where employees set aside money into a tax-favored account for health care needs.
- The Medical Savings Act (MSA), which allows employees to set aside tax-favored savings for future health care needs. Companies with 50-plus employees are exempt from the act.
- The Health Reimbursement Act (HRA), a plan where an employer can set aside money used to reimburse employees for health care costs.
This idea for “consumer-driven health care,” Hodges said, would also have to have some help from the government in the area of providing a variety of health care savings plans to carry unspent health care savings forward from year to year while offering tax benefits for those that do save.
“There is some legislation currently being discussed but I don’t see it getting passed,” said Hodges.
“There have been little steps made, where some legislation has passed regarding prescription coverage for Medicare, but this answer is really something that will take a long time and would be the answer to many problems in a perfect world.”
The second part of Hodges’ consumer-driven health care plan concerns how consumers save money from procedure to procedure and prescription to prescription.
He said the answer lies in a doctor and prescription abstract shopping guide.
Hodges feels that a quality guide for physicians needs to be put together and given out by health insurance companies in a way that doesn’t suggest or promote any one doctor.
The idea would be to provide information patients could use to make an educated choice of doctor, surgeon or specialist.
This, Hodges said, would put all of the choices in the consumer’s hands.
“For this system to work it would have to be an inbreed of the three choices — FSA, MSA and HRA — with tax breaks in place also,” said Hodges.
“Before health care,” he said, “people thought twice about what they were doing to themselves.
“It is easy to take a pill to lower cholesterol when it is free, but when you have to pay for it you might think twice and change your diet to lower your cholesterol.
“We really need to pay for the choices we make and take care of our health.”