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Shades of Green: 3 Reasons Why You’re Ready for Change

Thursday, January 30, 2020
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Mom advice that is fit to live by:

If it smells, or has stuff growing on it, throw it out.

The rotten lemon in this case is likely your health and benefits strategy.  National benchmark reports indicate that businesses should be prepared for more of the same in the years to come: health inflation that is rising at a rate much faster than wages.   

Let’s take a closer look at three simple signs that it’s time to create change.

Sign #1Year-over-year negative wage increases.

How many of your Employees are seeing year over year wage increases of more than $1,000 per year?

Families are the hardest hit by these escalations, and they can show it in their paychecks.

Between 2009 and 2019, family health premiums increased from $13,375 to $20,576, or a total increase of $5,068.     

You can compare numbers on your own at this link from KFF

Family health premiums graph 2009 to 2019
Line graph snippet showing the percentage of Americans who have delayed medical treatment due to cost

Sign #2: A record share of Americans delay treatment due to cost.

How can we begin to hedge even more costly risk, if the tool they count on to keep them healthy leaves more financial burden than they can afford? 

To help with answering this, keep in mind that worker premiums are up $2,500 between 2009 and 2019.  Out of pocket spending is up an additional $1,241, per data from KFF’s HealthSystemTracker.org.

This brings us to a total of $3,741 – which compared to census.gov data, leaves a shortfall of $1,608 given that median household incomes are only up $2,133 in this same time period.

Remember, families are up $7,201, which even without factoring in out of pockets, leaves a shortfall of $5,068. 

Sign #3: Healthcare costs continue to climb despite utilization being nearly flat or down in all categories.

How can you begin to control your health plan premiums, which is the financing mechanism for your healthcare claims, if those who are put in charge of controlling costs are not doing an effective job?  

Do you need specific examples?   

  • Diabetes: In 2009, the cost of insulin has gone from under $100 on average to nearly $300.  Assuming one vial for every 28 days, that’s a $2,700 per year increase. You can view more data here. 
  • Knee replacements: The cost for a knee replacement is up nearly $10,000 in the past decade.   
  • Biologics: A prime example is Humira, which has increased from $1,524 per dose in 2009 to $5,174 in 2019.  Assuming 9 treatments per year, that’s a $32,850 per year increase.    
  • The list goes on 
Cumulative change in spending per person, utilization, and average price since 2013

In these three signs, we show that most of the current health plan strategies are futile at best.  With costs increasing at a rate that is faster than wage growth, more and more Americans are on a financial crash course and just one catastrophic health incident from disaster. 

Whether you are the CEO of a business, or the CEO of a health plan (finance, human resources, etc), then you should be asking yourself a simple question: “Is there still a benefit to our benefits program?” 

Other resources:

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