Yes, we passed a sweeping reform package in 2010 with the controversial Affordable Care Act. As the name implies, it was supposed to help control health care costs, and be fully implemented in January of 2014. But health care costs still seem to be rising? Why is that?
There are several reasons:
- Pharmaceutical companies continue to invest and innovate and market new drugs and technologies – which are extremely expensive.
- New medical technologies
- An aging baby boomer population now bidding up demand for health care services, even as a wave of baby-boomer doctors hits retirement age.
- The “insulation factor.” Consumers largely pay for health care with other peoples’ money, not their own, and therefore take less care to control expenditures.
- Overuse. Too many people are tying up emergency rooms for common, everyday non-emergency issues that are best solved with a doctor’s office visit at a fraction of the cost.
Additionally, while the subsidies were supposed to help limit expenditures, they evaporate once an individual makes more than $47,000 per year. So those making more money than that are still paying the full cost of insurance premiums without the benefit of the subsidies.
Most observers have concluded that managed care options like health maintenance organizations have ceased to deliver additional savings. The next wave in controlling costs seems to be coming from the growing movement for consumer-directed health care. That is, consumers will be taking more direct control of their health care dollars, though taking on more individual risk for health problems at the same time.
For example, health savings accounts let people save up money tax-deferrered in advance of health care problems. Expenditures from HSAs for qualified health care expenses are tax-free. HSAs can only be used in conjunction with a qualified high-deductible health plan. But the balances in HSAs make those high deductibles more affordable, while enabling consumers to benefit from the lower premiums higher deductibles allow.
Under current law, however, only certain individuals and families who are not covered by traditional forms of health insurance are allowed to contribute to health savings accounts and enroll in qualified HDHPs. Even so, these plans are achieving increasing market share, according to information from the Kaiser Family Foundation.
Analysts hope that by passing responsibility for at least the first few thousand dollars of health expenditures back to the consumer or worker, they will take a more personal interest in preventing health problems and finding cost-effective treatments without wasting money.
Communication Is Key

As consumers take on more responsibility for resourcing their own health care, education and communication is becoming more important. While families still have coverage for major medical events, they often need help planning and budgeting to meet newer, higher deductibles, managing preventive care issues, and making the most out of Health Savings Accounts, Flexible Savings Accounts and other health savings vehicles and benefits.
Role of the employer
Employers who have the budget for a full-time HR professional can lead the way in this endeavor. Larger companies, who frequently self-fund their health coverage, have considerable skin-in-the-game in making consumer-directed health insurance work, because it’s their money that is at risk.
In other cases, health insurance companies themselves are taking the lead, with a variety of educational videos, websites, pamphlets and tutorials.
Insurance carriers are also publishing guides to help consumers shop for the best deals for common medical procedures, and highlighting the advantages of using generic medicines versus brand-names where generics are available.
Some insurance agents and carrier representatives are also holding in-service ‘training’ and educational sessions not just for employees, but for employers and HR professionals involved in the education and communications process.
From there, carriers and employers are implementing health and wellness programs and educational seminars on everything from smoking cessation to weight loss to yoga.
We are already finding out that limiting communication to annual enrollment periods isn’t enough. The most successful companies make education and wellness a year-round priority. Health care meetings are paid and mandatory.
The message should also be communicated in a variety of media. Younger workers do fine with web-based education, for example, while some older workers learn best in the classroom or from printed material. Understand your work force, and tailor your communications effort to match them.
In the long run, if there are savings to be had, everyone’s a winner. If you have questions or would like to review your health care coverage, please call ACBI at 203-259-7580 or visit our website to request a call back.
ACBI Insurance 