Given that about half of Americans receive their health insurance coverage from the workplace and that costs are doubling every 10 years¹ for employees at small and medium-sized businesses, we need to acknowledge the health care cost crisis in this country.
We believe that we have a responsibility to our client employers and their employees to meet this crisis head-on in our role as benefits consultants.
Today I want to look at four key statistics that explain why the healthcare system is so broken and why we’re doing what we’re doing to help employers manage their costs and improve benefits for their employees.
Emergency Savings are Inadequate to Meet the Average Family Deductible
While 50% of Americans couldn’t afford a $400 emergency expense, the average family deductible is $3,700. While we have plenty of waste in our healthcare system, we also have a significant affordability crisis.
When employees can’t meet their health care expenses, they skip scheduled and recommended appointments and skip guideline consistent care.
Bottom line: unaffordable care is leading to worse health outcomes.
It’s critical for employers to address cost drivers and plan design issues that create this dynamic. Better designed plans incentivize employees to get the care they need, when they need it.
Think of it like this: it’s better to pay for years of insulin than to pay for one stroke.
While Wages Stagnant, Health Care Costs Continue to Rise
For the last 35 years, wages have been stagnant in real terms. Meanwhile, health care spending has nearly doubled over the last 20 years.
This is a huge disconnect. As a result, health care expenses are now taking up a significantly larger portion of the average American’s budget. This isn’t sustainable and we need for the payers, us, to push back against this trend.
Disparities in Care Cost Everyone and are Unacceptable
Depending on how familiar you are with ongoing disparities in this country, you may be shocked to learn the disparities in health outcomes along racial lines.
A significantly greater percentage of black cancer survivors skip medications and care compared to white cancer survivors on similar health plans. For these patients, 23% of black cancer survivors vs 8% of white cancer survivors face cost-related barriers in their care. These patients have been led to skip a medication, delay a refill, or pass on seeing a specialist.
Both the disparity along racial lines as well as the significant overall portion of patients skipping care due to costs is concerning for a system that purports to be the best in the world.
This is a concern for employers, as their spending increases as outcomes worsen and employees are not consistent with guideline care for their conditions, beyond just the ethical concerns.
Who is Benefiting from Health Care Cost Increases?
The Affordable Care Act was passed in March of 2010 along with much fanfare in a belief that it would rein in insurance company profits, rightly seen as a contributor to the health care cost issues in the country.
Since then, health insurance carrier stocks have seriously outperformed the overall stock market during an overall bull market run. Depending on the dates you look at it, the S&P 500 is up by about 175%, while health insurance carriers stocks have nearly tripled.
When we see that kind of outperformance by carriers during a period when they were supposed to be reined in, we need to ask ourselves if they’re being rewarded for helping the average American in their healthcare.
Looking at the preceding statistics, it’s clear that in fact a huge disconnect exists between health outcomes and carrier stock prices.
So when the average small and medium-sized business receives a 8%, 10%, or a 15% or higher health insurance renewal this year, they need to ask themselves: what am I getting for this, and how can I do better?
The Future is Here, It’s Just Unevenly Distributed
From the statistics above, you can see that we can and must do a lot better.
Our role as benefits consultants means much of the responsibility to create this change starts with us. And this crisis won’t be solved with a single, sweeping change.
- Mercer National Survey of Employer-Sponsored Health Plans 2020