Over the past decade, health care spending has been rising year-over-year by 4.6 percent, with costs rising faster than the annual rate of inflation. Driven by rising health care costs, employers now offer high deductible health plans (HDHPs) at a much higher rate than in the past.
Americans are facing a number of struggles related to the cost of health care. According to CMS, household spending on health care rose 4.5 percent in 2019. The largest growth was in premium contributions and out-of-pocket expenses, the latter of which is the largest category of household spending in health care.
And these trends run headlong into worrying statistics around the average American’s financial security, as the Federal Reserve found that 40% of Americans could not afford a $400 emergency expense.
The need for affordable and valuable health care is crystal clear.
And for the 140 million Americans who receive health benefits from their employer, there is a path forward to better benefits at a lower cost.
Unmanaged Health Care Costs Employers Big Time
It seems simple but let’s get on the same page. We can’t make a meaningful change unless we’re clear on what isn’t working today and why.
Currently, most employers with under 300 to 500 employees pay their monthly premiums and receive a rate increase at the end of the year. Their broker may put other carriers on a spreadsheet to pick the lowest-priced option, they may make plan changes to reduce costs, or they may just pass costs to employees or absorb the increased expense as an organization.
None of which seem like very good options, and especially don’t address the underlying cost drivers.
Employers must be able to see their claims data in order to find ways to reduce their spending and improve benefits.
You can’t improve what you don’t measure. And when small businesses spend about $13,500 per employee per year on health care, you start to see the opportunity in front of most employers today.
Data, Insight, Intervention
Imagine you were trying to make a health change, such as losing weight. What would you do?
You’d likely start by weighing yourself for a baseline, then quantifying various activities or behaviors related to your health. How much you are eating, how much you’re exercising, how much water you drink, and more. If you aren’t seeing a result or your results are insufficient, you can refer to your numbers and make a change.
But if you don’t measure what’s important, you don’t have insight into what changes to make.
Isn’t it shocking then how organizations may spend $1 million, $5 million, or $10 million or more per year on their employee’s health care with no data?
Health care claims data is the foundation for organizations to begin addressing their health care cost crisis.
With data, we gain insights into current spending and savings opportunities. Then, we can identify possible interventions and observe their results in future claims data. Then we can start the process over again and find new ways to enhance benefits or reduce wasteful spending.
Perhaps there is a population of pre-diabetic individuals who would benefit from education and increased focus.
Is there higher than normal spending on musculoskeletal procedures?
Is there a facility or medical group with high costs and poor outcomes?
Are we overspending on tests like MRIs because a local provider is charging rates far above market prices?
None of these insights are possible without first obtaining past and current claims data. Only then can we get to work saving an employer costs and enhancing employee’s benefits.
Work with Data-Driven Consultants
It’s our opinion that organizations get the most out of their service providers when they work with data-driven consultants. Whether it’s your supply chain, your marketing spend, or your health care costs, data leads to insights and strategies to unlock savings and enhance your benefits.