By Jonathan Pocius of Payroll Services, LLC
I recently attended a meeting with several colleagues with a healthcare guest speaker. Being a licensed insurance broker I always enjoy listening to new strategies.
I learned a little known fact: World War II gave birth to the private health care market. In 1942, Congress passed the Stabilization Act of 1942 freezing wages and salaries for workers. In order for companies to continue to recruit and pay employees, Employers started providing Employer paid health care. Prior to this, individuals paid for their own medical care in cash.
The discussion was around how to control health cost and ways to possibly change it. Ultimately, the conversation focused on one major area, and that was behavioral changes.
Many plans offer incentives (wellness plans) to get individuals to do certain things. Stop smoking, get $500. Lose 20lbs get $200, etc. We have implemented many of these types of plans within our groups but they are extremely difficult to maintain. We see an initial “boom” in usage, and then a steep drop off.
Between 1985 and 2010 the Body Mass Index (BMI) of 30 or more (obesity) spiked from an average of 10% to over 25% nationwide. Indiana University – Perdue, did a study showing 87.5% of health care costs are lifestyle related.
If 87.5% of health care cost are lifestyle related, and wellness plans typically are short term success, what options do we have? Could it be in providing better “long term coaching” for individuals to better their lifestyles? Could it be putting more responsibility to the individual to control their own cost? Besides, should or can the Employer really be forced to try and change their employee’s lifestyle to reduce a major expense?
For small groups (companies with less than 50 full time equivalents) the answer is extremely difficult. There is only so much that can be done since rates are community based. We use certain strategies like the “bridge strategy” and “first dollar coverage.”
For larger groups (over 50 full time equivalents), there are more options.
Ultimately, the solution to rising healthcare cost does not lie with government intervention or incentive plans. The solution is with individual Americans taking more responsibility for their lifestyles. Recognizing that good health is not contained in a magic pill, but in exercise, health foods, avoiding smoking and other unhealthy activities. Until Americans embrace these simple concepts and act, health care cost will continue to rise.