Government Figures on Rising Health Care Costs Unrealistic

The Obama Administration promised us that ObamaCare would lower Medicare costs, provide health insurance for everyone, and fix our health care system in the United States. Obviously, it has done none of that, and we see that health care costs have increased 8% per year since Obama took office, with no end in sight on that graph.

There was an interesting article recently in Positive Futurist Online News titled; “Medical advances predicted for next 20 years will lower health costs,” written by Dick Pelletier which noted;

“The US Congressional Budget Office predicts health spending will rise from 17% of the economy today to 25% by 2025. This projection suggests that medical research will expand over the next 20 years as scientists attempt to turn cancer, heart disease, diabetes, obesity; and mental disorders like Alzheimer’s and Parkinson’s into more manageable conditions, making them easier and less expensive to treat.”

Indeed, I hate to break it to anyone, but The Congressional Budget Office (CBO) is way off base. In the last two years health care costs in the United States have risen 16%, and at that rate, if things keep going, then it will far surpass the 25% of our economy by 2025. Already Medicare is a $260 trillion obligation if we take that off into the future of the 300+ million people living in the United States right now. The numbers don’t lie, and they obviously don’t work.

Now then, I’m going to hold short of calling Medicare a Ponzi scheme, although, I do believe it is, but I will leave that for another article. My point here is that we cannot trust the CBO’s numbers, projections, or that information and data they claim to be correct, genuine, and empirically correct. Further, the CBO seems to have been bullied by the senators, House members, and Obama Administration that tried to convince the American people that ObamaCare was actually the solution to our health care challenges in the future.

The reality is that ObamaCare has made things worse, and the worst is yet to come. Many of the new provisions don’t kick in until 2014, and most of the small businesses right now are not hiring because ObamaCare makes it too costly for them to add employees. Remember small businesses account for between 60 and 70% of the employment in this country. We can’t get new jobs and recover until small businesses start hiring again.

Unfortunately, they can’t, thanks to ObamaCare. This means there will be less tax revenue coming into the country, to pay for all these socialist programs including ObamaCare. Therefore it throws the CBO numbers off even worse, because they were assuming that the economic recovery would provide additional tax revenue, but instead their numbers were trillions of dollars off. With numbers like that, who can trust anything that they say anymore? I for one certainly don’t, how about you?

Indeed, I hope you will please consider all this and think on it.

Cutting Health Care Costs in Your Company Or Corporation

Every company and Corporation wants to find ways to cut expenses, and it is becoming apparently clear that one of the fastest-growing costs is health care. In fact health care expenses and costs have outpaced inflation by a factor of 10 over the last decade. And if you thought things were going to get better with Obama Care, it appears that things have only gone up since then, and will probably continue to climb.

There are a number of reasons for this and many that were not factored in by the congressmen and women who voted for this. Yes and the OMB which promised we would lower our government’s cost, health care, and the politician’s promises that they would lower our personal costs. Most voters currently are not amused, and most corporations after figuring out what it will really costs them, have taken a one-time charge against their quarterly profits.

A recent article in the Wall Street Journal noted that for many employers it would be cheaper to pay the fine than to actually insure their employees for health care. For instance, the article stated “If AT&T stopped health care for their 283,000 employees it would have to pay $600 million in fines. However it would reap the rewards of saving at least $1.8 billion over the next decade.” Companies such as Caterpillar, General Electric, and AT&T shocked Wall Street with their estimates of what the new Obama Care would cost their companies.

Well prior to the ObamaCare passage there was an interesting article in business week on November 23, 2009. It was an article by Catherine Arnst titled;

“10 Ways to Cut Health Care Costs Right Now – Employers and Hospitals Don’t Have To Wait for Congress to Address Inefficiencies and Waste”

In this article the author suggests “cracking down on fraud and abuse, developing a healthy workforce, coordinate care through family doctors, make health a community effort, stop infections in hospitals, get patients to take their medicine, discuss options near end of life, use insurance to manage chronic disease, let well-informed patients decide end of life issues, and apologize to the patient.”

These do indeed sound like great ideas, unfortunately many of them were not addressed in ObamaCare, and therefore they still remain problematic. The MSRA virus is a huge cost, and it is true that people are completely out of shape in America, and there are far too many malpractice lawsuits, which could have been prevented, merely by apologizing to the patient, and explaining what happened and why.

In reality, there is probably no good way to cut the health care costs or the insurance cost for your company or Corporation, because they are skyrocketing at such a huge rate, that even if you cut some costs now, you will still be paying more for insurance and healthcare well into the future, we all will. Therefore, it might just be worth paying the fines, rather than insuring or providing health care for your employees, this is definitely something to think about.

Who is Responsible For Unsustainable Health Care Costs? – Part II

Part 1 of this three-part series answered this question by addressing the fault of health insurance brokers. Part II of this series shifts to the culpability of employers who provide insurance to their employees.

The employer-based health insurance system that we are familiar with in this country is very unique. No other industrialized nation has anything quite like the American system which developed as a means to circumvent wage controls that were imposed by Congress during World War II. Since that time, employees have come to expect fringe benefits such as health insurance as part of their total compensation package. In this system, we entrust our employers with some very important decisions that largely determine what our cost of medical care and access to medical care will be. We rely on our employers to make good decisions that will afford us better access and cost control than we would have on our own.

A very disconcerting pattern that I see as I interact with Human Resource and Finance Executives is that heavy workloads and apathy prevent decision-makers from spending the time necessary to make and implement good decisions on behalf of their employees. All too often, the decisions are made late in the game without a proper decision-making process and the path of least resistance is taken. That path of least resistance is usually to simply renew the current plan and absorb the customary double-digit increase or to weaken the plan in some fashion to save money. Shortsighted decisions such as these lead to higher premiums and/or higher out-of-pocket costs for employees.

The average Employer Premium Contribution in 2009 is $4,824 for single coverage and $9,860 for family coverage (The Kaiser Family Foundation and HRET, 2009, p. 2). The cost of benefits can easily add 10% or more to the total cost of compensation for an employee. We are not just talking about the cost of free sodas in the break room here. These decisions merit the best decision-making skills of HR and Finance executives. A thorough and responsible decision-making process includes the following:

  • Internal research to learn about trends and best practices in benefits
  • An early dialogue with the broker – a good broker will initiate this dialogue several months in advance of the renewal
  • Exploration and discussion with other brokers and administrators to make sure your broker is the best option for you and to allow healthy competition to work in your favor
  • A willingness to make changes to plan design, carrier, and/or broker in order to contain rising costs without sacrificing the quality of coverage

I am an HR Professional and I have been through years and years of health insurance renewals on the employer side prior to coming to the brokerage side. During those years as an HR Director, I was at times guilty of rushing the process, guilty of being closed-minded, guilty of making dangerous assumptions, and guilty of not doing my due diligence before making decisions that would bind my company and employees for another year.

The best renewal experience I ever had, though, was the year I took the time and effort to truly make the best decision. It was the year that I put my time constraints and assumptions aside in the interest of finding real solutions. In that year, solutions were found and decisions were made that led to a 30% savings for the company and yet better coverage for the employees. These win/win outcomes were very gratifying and well-received, especially in a year when the company would have otherwise been forced to cut benefits or pass on more cost and liability to the employees. Those outcomes were only possible though, because of a willingness and determination to find solutions to the problem of rising health care costs.

HR professionals clamor for the same recognition and respect that other leaders in the organization get. These are the types of outcomes and decisions that will vault you as an HR professional to a higher level of respect and influence within your organization. It will not come to those who always accept status quo and allow problems to get worse every year. Approach your next renewal season with a determination to make it the best renewal ever by solving the nation’s problem of unsustainable health care costs for you and your employees.

Reference

The Kaiser Family Foundation and Health Research & Educational Trust (2009). Employer Health Benefits 2009 Annual Survey (Electronic Version). 2