Employer Wellness : America’s Medical Care Crisis
Over the past decade health insurance costs have climbed steadily. This is taking a toll on the bottom-line of corporations, cutting into earnings, limiting growth and forcing a reevaluation of the employee benefit system. According to a projection by McKinsey & Co., at the present rate, by 2008 health benefits will eclipse earnings at the average Fortune 500 employer.
Corporations, through private health care insurance employers, are the leading provider of medical services in America. In 2004, 59.8% of American citizens were covered by a corporation-based health care insurance program, accounting for 88% of all private health care insurance. Yet the increasing costs of Health Care, ever-increasing drug prices and a steady rise in chronic diseases have brought the corporate culture to a breaking point.
For many businesses the growing burden has become too difficult to carry. During the past five years health insurance premiums have increased an average of 11.6 percent annually, more than four times the average rate of inflation and employee earnings over that time.3 Not surprisingly, this exponential growth in costs has caused the number of businesses offering Healthcare services during that time to drop from 69 percent to 60 percent.4 In addition, in 2005, health insurance premiums jumped 9.2 percent, more than three times the rate of inflation – and that was the lowest increase in the past five years.
In this environment organizations need to discover progressive ways to stem the rising costs of Health Care coverage. Seemingly, the easiest strategies to accomplish this goal would be to cut benefits coverage or pass on an increasing burden to workers and retirees. More than 80% of organizations have chosen one or both of these cost saving measures in the past few years and almost half of all large organizations are likely to increase the amount workers pay in 2007.5
However, these methods do nothing to address the fundamental causes of rising costs, one of which is a population that requires increased healthcare. To make a lasting and meaningful influence on costs and central health, businesses need to look beyond a traditional reactive-based approach.