The Cost of Healthcare on Employers and Employees: How to Drive Down Expenses

The rising cost of healthcare has become a major concern not only for employees but also for employers. The cost of healthcare in the US is soaring, and it is one of the largest expenses for employers. It's no secret that the cost of healthcare has been increasing for years, but some employers just don't realize how much it's impacting their bottom line. According to the Kaiser Family Foundation's (KFF) 2020 Employer Health Benefits Survey, average annual premiums for employer-sponsored health insurance rose 4% to reach $21,342 for family coverage. In this blog post, we will examine the statistics on the cost of healthcare to an employer and employee and also discuss ways to drive down those expenses.

The Impact of Healthcare Cost on Employers

Employers bear the brunt of the cost of healthcare, as they are expected to provide healthcare coverage for their employees. The KFF survey found that on average, employers contributed 83% for single coverage and 71% for family coverage. The remaining cost was passed on to employees. Employers also bear indirect costs that are associated with healthcare, such as absenteeism and reduced productivity.

To manage the cost of healthcare, employers are choosing high-deductible health plans (HDHPs), which shift more of the costs on to employees. HDHPs are designed to encourage employees to take more responsibility for their healthcare decisions and to choose less expensive care options. They offer lower monthly premiums but come with a high annual deductible that employees must meet before insurance coverage kicks in.

Effect of Healthcare Cost on Employees

The cost of healthcare is also affecting employees in a big way, as they are paying higher premiums and deductibles. According to the KFF survey, the average annual deductible for single coverage in 2020 was $1,644, and the average out-of-pocket limits for in-network care were $4,033. Employees are also facing higher copayments and coinsurance rates, which are driving up their healthcare costs.

To reduce the impact of healthcare costs on employees, employers are offering wellness programs that encourage them to take care of their health and avail of preventive care. Employees who participate in wellness programs are less likely to develop chronic conditions and require expensive medical treatment, which can help reduce the overall healthcare costs for the employer and employee.

How to Drive Down Healthcare Costs

The cost of healthcare is one of the biggest expenses for both employers and employees, but there are ways to drive down those expenses. One way is to implement preventive care measures, such as wellness programs, health screenings, and immunizations. These measures can help identify and prevent health conditions before they become serious and require expensive treatment.

Another way to drive down healthcare costs is to encourage employees to use telemedicine services, which offer virtual consultations with doctors and healthcare providers. Telemedicine reduces the need for expensive in-person consultations and can help employees save time and money.

Employers can also negotiate with healthcare providers and insurance carriers to reduce the cost of healthcare. Group buying power can give employers an advantage when negotiating with healthcare providers, which can lead to lower costs for both the employer and employee.

The cost of healthcare is one of the largest expenses for employers, and it's affecting employees in a big way. The rising cost of healthcare is unsustainable, and something needs to be done about it. Employers and employees must work together to drive down healthcare costs. Employers can implement preventive care measures, encourage the use of telemedicine, and negotiate with healthcare providers and insurance carriers. Employees can take responsibility for their own health and availing preventive care measures. Together, we can reduce the cost of healthcare and make it more affordable for everyone.