Business Survey Finds Health Care Costs 'Out of Control'

In a survey of health care decision-makers at 200 area employers, 92 percent said health care costs are out of control, but only 35 percent are considering taking any additional action to address the situation. Harvard Pilgrim Health Care CEO Charlie Baker discussed the results of the survey during a speech to business leaders at the Greater Boston Chamber of Commerce today. Baker challenged employers not to become resigned to rising medical costs and to think differently about how they structure their employees' health insurance benefits.

Baker noted that the survey shows a distinct disconnect between employers' high level of concern about the rise in health care costs and their planned actions to affect change. Employers surveyed said that next year, as in years past, they will address cost increases primarily by having their employees pay a larger percentage of premiums, higher copayments for doctor visits and prescription drugs, or higher deductibles.

"Employers believe that making their employees more active and involved consumers would have a positive impact on their bottom line," Baker said. "They also acknowledged that simply making their employees pay more of the bill for health care each year doesn't motivate them to help control costs. However, they are frustrated that they don't have more creative options to offer employees."

Baker pointed out that employers and health plans have helped shield consumers from the true costs of medical services by offering rich, "first-dollar" coverage with an almost unlimited choice of providers. "The dark side is that employers and health plans have not historically involved employees, so costs have been shifted to them without giving them any voice or choice about how their health care dollars should be spent," Baker said.

Baker said that employees and health plans need to help employees understand how expensive health care is and why. The two groups can do this by helping employees become more involved in selecting health benefits that meet their needs and supplying them with critical cost and quality information to use when they select or use a doctor or a hospital. Most employers estimated that their employees took less than one hour to make their annual health benefits choice.

"There are things we can do that will make a significant impact on controlling costs while providing high quality health care, preserving choice and creating more educated consumers. We all need to work harder to 'bend the trend,'" he said.

The survey shows that 82 percent of employers feel that employees should take a more active part in their own health care decisions. Almost all surveyed agreed that employees should have actual prices available to them when they choose their health plan and use medical services such as deciding to have an elective procedure, filling a prescription, selecting a health plan, making a doctor's appointment, selecting a hospital and choosing a physician.

More than 60 percent said that they believe their employees would think more about controlling their health care costs if they had information about less expensive alternatives and knew the true cost of medical services.

"When you give people the proper information to make their decisions, they take a more active role in their own health care," said Baker. "We all need to create an attitude adjustment concerning health care costs."

Baker's call to action to create this new environment includes:

  • Using "fixed dollar" contribution policies to make the financial consequences of employees' choices apparent to them.
  • Offering employees health plan choices and ask them to seriously consider what is best for them.
  • Making consumers aware of the costs of medical services and procedures.
  • Arming consumers with information on performance and encouraging consumers to start making comparisons based on costs and quality.

"There is no silver bullet. However, Harvard Pilgrim's own experience as an employer demonstrates that active and involved employees will become better consumers who will make smarter decisions in our complex and highly regulated health care marketplace as we've reduced our own health benefits cost increase from 15 percent to under 10 percent," Baker said.

You may like these other stories...

Individuals interested in reviewing the proposed 2015 US Generally Accepted Accounting Principles (GAAP) taxonomy from the Financial Accounting Standards Board (FASB) have until October 31 to submit their written comments....
Ernst & Young 2013 audit deficiency rate 49%, regulators sayMichael Rapoport of the Wall Street Journal reported on Thursday that the Public Company Accounting Oversight Board (PCAOB) found deficiencies in 28 of the...
PwC must face $1 billion lawsuit over MF Global adviceA federal judge on Wednesday ordered PricewaterhouseCoopers (PwC) to face a $1 billion lawsuit claiming that its bad accounting advice was a substantial cause of the...

Already a member? log in here.

Upcoming CPE Webinars

Sep 9
In this session we'll discuss the types of technologies and their uses in a small accounting firm office.
Sep 10
Transfer your knowledge and experience to prepare your team for the challenges and opportunities of an accounting career.
Sep 11
This webcast will include discussions of commonly-applicable Clarified Auditing Standards for audits of non-public, non-governmental entities.
Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.