Posted by Health Handouts | Posted in Health Handouts, Health Tips | Posted on 23-06-2009
During the past decade health care insurance costs have climbed at a steady pace. This is taking a toll on the bottom-line of organizations, cutting into profits, limiting growth and forcing a reevaluation of a once sacred employee benefit system. According to a projection by McKinsey & Co., at the present rate, by 2008 health benefits will eclipse profits at the average Fortune 500 business.
Businesses, through private health insurance businesses, are the leading provider of medical services in America. In 2004, 59.8% of Americans were covered by a company-based health insurance program, accounting for 88% of all private health insurance. Yet the increasing costs of Medical Care, ever-growing prescription drug prices and a steady rise in chronic illnesses have brought the corporate society to a breaking point.
For many companies the growing burden has become too difficult to carry. During the past five years health care insurance premiums have grown 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 growth in premiums has caused the number of companies offering Health Care services during that time to drop from 69 percent to 60 percent.4 In addition, in 2005, health care 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 innovative ways to mitigate the rising costs of Health Care coverage. Seemingly, the easiest strategies to accomplish this goal would be to lower benefits coverage or pass on an increasing burden to workers and retirees. Greater than 80 percent of organizations have chosen one or both of these cost saving measures in the past few years and almost half of all sizable organizations are likely to increase the amount workers pay in 2007.5
Nonetheless, these methods do nothing to mitigate the primary causes of rising costs, one of which is a population that needs increased medical care. To make a lasting and meaningful impact on costs and overall health, organizations need to look beyond a antiquated reactive-based approach.