How employers can control health care costs through wellness programs Employer Experience and Benefits | July 18, 2022 Share Reduce your medical spend and improve employee well-being with a workplace wellness program centered around an employer-sponsored health clinic Although astronomical health care costs disproportionately affect uninsured adults, Americans with health insurance still battle with the burden of payments. Almost half of insured adults report struggling to afford out-of-pocket costs and one in four find it difficult to afford their deductible. [1] As an employer, you can play a vital role in managing health care costs for your workforce, while also reducing the medical spend at your company by finding solutions that mitigate the burden of care. Continue reading to learn why a workplace wellness program centered around an employer-sponsored health clinic is the solution to controlling health care costs that you need. How much does medical care cost on average in the U.S.? With health insurance being the principal indicator of medical care costs, the most recent data shows that the average annual cost of health insurance in the U.S. in 2021 was $7,739 for an individual and $22,221 for a family. [2] Additionally, the most recent data on general health care spending found that in 2020 it reached $12,530 per person with a 9.7% growth rate. [3] When it comes to health spend for employers, the average cost of employer-sponsored health insurance per employee increased 6.3% in 2021 with expectations of a more normal jump of 4.4% set for this year. [4] However, some experts are forecasting an ongoing accelerated growth in health care costs far beyond employers’ expectations due to higher-utilization rates after putting off care during the height of the COVID-19 pandemic, claims for long COVID, new expensive cellular drug therapies, and general inflation in health care prices. [4] Health care costs are becoming a massive burden for employers. Some may want to attempt cost-shifting, but they risk putting too much stress on the health of employees who have already shown to have put off or skipped some form of health or dental care in the past year because of cost. [1] Why does healthcare cost so much? At the end of 2021, Kaiser Family Foundation reported that family premiums for employer-sponsored coverage in the U.S. had increased 47% in the last decade—a rate that outpaces both wage growth and inflation over the same time period. [5] With such a drastic and steady increase, Americans are often left questioning why they are required to spend so much to take care of the health and well-being of themselves and their loved ones. Although it is a combination of many factors, some of the largest drivers of high healthcare costs include: Silos of care refer to the way in which patients in the U.S. are predominantly treated by different doctors for each medical issue individually rather than by a primary care physician that takes a holistic look at the patient and avoids duplication of costly procedures and tests. Chronic conditions such as high blood pressure, diabetes, smoking, physical inactivity, and obesity alone cost U.S. employers $36.4 billion a year due to missed days of work. [6]Pharmaceutical drugs cost nearly four times higher on average in the U.S. than other similar countries. [7] Prevalence of low-value care services like unnecessarily ordered MRIs or CT scans for acute issues have been estimated to cost the U.S. healthcare system $75 billion to $100 billion annually. [8] Lack of cost transparency in the U.S. healthcare system is costly for patients who are unable to make decisions based on price. By having insurance, patients have no idea how much the medical goods or service they purchase actually cost. Fee for service model of the U.S. healthcare system causes physicians to become incentivized to schedule more appointments and order unnecessary tests for patients because they only get paid when they provide a service. Administrative fees account for an estimated 15-25% of total national health care spend in the U.S., potentially meaning that a quarter of the costs of your medical care are not even for the care itself. [9]Provider consolidation across the healthcare industry to expand market share influences companies to increase the cost of their services due to reduced competition. Increased demand for care as the global life expectancy continues to rise poses a costly burden with 13-25% of Medicare costs spent by patients in their last year of life. [10] Whether or not you are witnessing the direct impacts of these factors on the healthcare spend at your company, it is no doubt affecting your bottom line. With many of these factors being controllable, it is imperative that you enact strategies at your workplace that can effectively mitigate the effects of these cost driving factors. How can employers keep healthcare costs down? When it comes to lowering healthcare costs, many employers look to different insurance cost management strategies such as dropping coverage completely, changing carriers, self-insuring, or implementing a high deductible plan. Although these insurance-focused strategies can help, they are often not the best option for your employees or the most effective way to save on your company’s medical costs. Instead, one of the best ways to reduce healthcare spend is to implement a workplace wellness program that is centered around an onsite or near-site employer-sponsored health clinic. What is a workplace wellness program? A workplace wellness program is an all-encompassing, coordinated set of health promotion and protection strategies enacted by an employer that includes programs, policies, benefits, and more that are designed to improve the health and well-being of employees. [11] A great way to get a workplace wellness program started is to invest in an employer-sponsored primary care clinic for your team that is either housed at your worksite or a nearby, convenient location. If you have a remote team or hybrid work environment, you can work with an advanced primary care provider that offers virtual care options through the clinic. With every $1 invested in primary care saving $13 in downstream costs, implementing a primary care clinic as the focus of your workplace wellness program can be an especially lucrative plan for your organization. [12] How does a workplace wellness program control costs? As an employer, investing in a workplace wellness program offers the potential to lower your health care costs and insurance claims by maintaining the well-being of healthy employees and supporting employees with chronic conditions in getting healthier. With chronic conditions accounting for 90% of the United States’ $4.1 trillion annual health care spend, improving the state of your employees’ chronic conditions can have a substantial impact on your medical costs. [13] Historical data has shown that well-implemented workplace wellness programs can lead to 25% savings each on absenteeism, health care costs, and workers’ compensation and disability management claims costs. [14] If you partner with an advanced primary care provider that utilizes a clinic as the touch point of your workplace wellness program, you can likely offer your employees no-cost doctor’s visits, mental health support, nurse health coaching programs, and no-cost or dramatically reduced cost pharmaceutical drugs. The University of Georgia conducted more recent research on workplace health programs that was studied across two decades and funded in part by The National Institutes of Health and the Centers for Disease Control and Prevention. They surveyed 20 organizations with workplace wellness programs in government, education, financial services, nonprofits, healthcare, and more with 450 employees total. [15] The study found that their wellness programs “increased perceived organizational support among employees, which directly improved their job stress, burnout, work engagement and organizational citizenship behaviors. Offering the program during work time, in particular, strengthened the benefits even more.” [15] In conclusion Finding ways to reduce your health care costs will not only benefit you as the employer, but also your valued team members too. If you decide to implement a wellness program with a health center, your employees will be able to take control of the health of themselves and their families with the support, care, and solutions they need to live happier, healthier lives. Interested in the possibilities of a wellness program for your team? Delivered through our health and wellness clinics both in-person and virtually, our advanced primary care services at WeCare tlc proactively manage the costly chronic conditions of your employees, while making long-term financial sense for you as the employer. “We make people healthier and companies stronger by utilizing employer-sponsored primary care services such as routine doctors’ visits, health coaching, lab services, and medication dispensing at no cost to employees and the dependents on the health plan,” explains Raegan Garber Le Douaron, President and CEO. “In turn, we proactively identify and manage complex, chronic conditions to bend the curve of rising health care costs for employers.” By creating a culture that clearly values its employees, your organization will benefit from increased productivity, improved recruitment and retention, and reduced absenteeism. With our identity rooted in being an independent, privately held business, our medical teams are given the tools and freedom to utilize the most effective services to diagnose and treat your employees and their families without any potential conflicts of interests. Ready to create a healthier workforce?Contact us today or explore our case studies to learn more. Sources: 1: KFF (Kaiser Family Foundation) | Americans’ Challenges with Health Care Costs 2: KFF (Kaiser Family Foundation) | 2021 Employer Health Benefits Survey 3: Centers for Medicare & Medicaid Services (CMS) | National Health Expenditure Data – Historical 4: Mercer | National Survey of Employer-Sponsored Health Plans 5: KFF (Kaiser Family Foundation) | Average Family Premiums Rose 4% This Year to Top $22,000; Employers Boost Mental Health and Telemedicine amid COVID-19 Pandemic, Benchmark KFF Survey Finds 6: CDC | Workplace Health Promotion 7: House Committee on Ways and Means | A Painful Pill to Swallow: U.S. vs. International Prescription Drug Prices 8: NPR | When routine medical tests trigger a cascade of costly, unnecessary care 9: JAMA (The Journal of the American Medical Association) | Administrative Expenses in the US Health Care System 10: National Institutes of Health (NIH) | Medicare Cost at End of Life 11: CDC | Workplace Health Program Definition and Description 12: Oregon Health Authority | Patient-Centered Primary Care Home Program 13: CDC | Health and Economic Costs of Chronic Diseases 14: CDC | Control Health Care Costs 15: University of Georgia | Wellness programs help employees — and their companies Previous blog Next blog