How much can you save on healthcare benefits? Calculate your savings.
Approximately 50% of Americans receive healthcare through their employers.1 According to a recent Crain’s CFO Forecast Survey, 80% of CFOs say that healthcare costs are outpacing growth. No wonder employees are being asked to pay for a bigger chunk of their care.
Employees now contribute more than ever to their healthcare costs. In fact, the increase in employee healthcare contributions has exceeded salary increases.2
And it’s not like the higher prices are buying us better care. Our life expectancy is shorter and we have a higher infant mortality rate. The World Health Organization (WHO) ranked the U.S. 37th among healthcare systems worldwide.3
There are several factors contributing to the high cost of U.S. healthcare. Two major factors are waste such as unnecessary tests, and the high cost of prescription drugs. Another important factor is lack of consumer awareness about healthcare costs.
Healthcare prices can vary widely depending on the provider, even in the same city. A couple of examples to illustrate the point:
But these numbers are hidden from consumers – until they see the bill or the Explanation of Benefits.
And don’t think a more expensive provider means better results. Decades of research show that hospital prices vary drastically and have little to do with the quality of service.6
If consumers knew the cost of care, they could make more educated decisions. Comparison shopping is fairly easy for other goods and services. But healthcare is complicated and prices are not readily available.
Not too long ago, health insurance covered practically everything so there was no motivation to find out medical costs in advance. But today, with such high coinsurance and surprise bills (such as for an anesthesiologist who isn’t covered by the patient’s health plan), we need to make prices more transparent. Hospitals are now required to post their prices online. But the descriptions are usually too unclear for the average consumer to understand.
We need a new type of health plan to lower the cost of healthcare for employers and their employees. Employers should look for a health plan that is:
1 https://www.visualcapitalist.com/americans-buy-healthcare/
2 Rising Health Insurance Costs Blunt Employees’ Paycheck Gains,” Bloomberg, September 19, 2017
3 https://www.einsurance.com/journal/8-reasons-healthcare-in-the-us-is-so-expensive/
4 http://www.msnbc.com/morning-joe/killer-hospital-rates-new-tool-lets-patien
5 How Economic Incentives Have Created Our Dysfunctional US Medical Market, Elisabeth Rosenthal, April 26, 2017
6 https://modernhealthcare.com/hospitals/setting-bar-hospital-prices