I have spent the past month visiting with many of you at AIM Human Resource Roundtables around the state about the rising cost of providing health insurance to employees.
These visits have underscored for me the degree to which health insurance increases during the past decade have left employers with a sense that they have no control over the issue. It is also clear that while some employers are moving beyond traditional cost-shifting to try more creative ways of controlling premiums, others are curiously reluctant to move away from the status quo.
Employers shopping for health insurance coverage this fall and beyond will find tiered network plan designs that moderate costs by encouraging patients to seek care in community settings that produce quality outcomes at reasonable prices. Also on the menu are limited network products like the one recently announced by Steward Health System that promise savings of 15 to 30 percent for patients who use Steward facilities for the majority of their care.
Why the hesitation by employers?
- Switching to a tiered or limited network plan design is a major change. Major change is rarely welcome or easy – for employer or employee.
- Some believe that tiered networks represent a benefit take-away for employees.
- Successful implementation of tiered or limited networks requires employers to develop an ongoing communication and education program to help employees become good consumers of health care.
- Some employers believe that tiered and limited networks will place a disproportionate burden on low-wage workers.
Tiered networks are far from a take-away. They typically retain full freedom of choice, though an employee’s share of the cost increases when higher-cost providers are utilized. The purchase of health-care services begins to resemble what happens with other types of purchases.
Attorney General Martha Coakley noted in two recent studies that there are dramatic differences in the amounts health-care providers are paid by insurance companies for the same services. She goes on to say that the differences cannot be explained by the quality of care - higher cost does not equate to better care.
And the real burden on low-wage workers comes from the long-term suppression of wage increases caused by soaring medical premiums. If employers really want to reduce health insurance costs, they must be willing to engage with these new plan designs and make the tough decision to educate their employees and make the plans work. Otherwise, expect more of the same.
AIM looks forward to an ongoing discussion with employers during 2012 on the cost of health insurance. We are, as always, interested in what you have to say.