Buck Bond Group

The Perverse Impact of Cost-Shifting in Health Care

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The Kaiser Family Foundation on Tuesday released the results of its annual survey of employer health plans, finding that, while there was a relatively modest 4% increase in premiums, deductibles have continued a steep upward trend. Deductibles for a single person’s coverage have risen nearly seven times as fast as wages and inflation and almost three times as fast as premiums over the past five years.

The results of the latest Kaiser Family Foundation survey of employer health plans show there was a 4% increase in premiums but, more alarmingly, the increase in deductibles has far outstripped wage increases.

While the results of the Kaiser Family Foundation survey were in line with expectations, the sheer cost of health care in the U.S., and the underlying health of our population, is alarming. The findings about higher deductibles show we don’t have a handle on health care costs and trend increases despite the reported 4% premium increase.

By pushing costs to deductibles, the people least able to absorb the cost shift are most burdened by it. There’s definitely a cost shift component to it, but there’s also a utilization impact that’s part of the cost savings inherent in converting to a higher deductible.

It’s not good for future trends for the immediate impact. If I have stage 1 cancer in 2016 that progresses to stage 2 and I’m not getting preventive care, then I’m not going to have claims in 2016 but in 2017 and 2018 I’m going to be on the top 10 claims list.

I have clients that are seeing large increases in specialty drugs but lower changes in medical trends. Yes, you may pay a fortune for these drugs but they prevent very expensive hospitalizations down the road. We’ve already converted a lot of clients to HDHP. Cost management – bringing overall trend down – is what we need to do.

One thing we’re seeing that’s really making a huge difference is the ACO PCMH is getting employees to become engaged with providers who have skin in the game to keep them healthy and prevent severe conditions to keep them out of the hospital.

There’s a limit to how much employers can shift costs, which is where wellness and health improvement come into play. Our sixth global wellness survey found that holistic and measurable wellness programs are no longer a nice-to-have – they are critical to the health and productivity of employees and the bottom line for organizations.