As the cost of providing healthcare to employees continues to rise, companies are searching for new ways to save money. Take for instance cost shifting: According to the International Foundation of Employee Benefit Plans, almost one-third of all employers have increased employee deductibles, out-of-pocket maximums, or the employees’ share of premiums. Additionally, more than one in five employers have increased co-payments and the proportion of dependent coverage costs. Not surprisingly, nearly one in six smaller organizations have gone so far as to reduce their workforce or adjusted working hours so that fewer employees qualify for health benefits. While these strategies may indeed reduce the bottom-line, they come at a great expense to their workforce and company culture.

These short-sighted approaches could lead to a decrease in employee morale, increase employee turnover, and drive away key talent if employees are dissatisfied with changes to the organization's health plan. Thankfully, there are other, better alternatives for employers to take control of costs without sacrificing employee relations.

1. Consider Self-Insurance

We have outlined the benefits of self-insured health plans in detail in an earlier blog post (which we consider a must-read for those considering self-insurance); here are just a few more takeaways to add to your knowledge base.

The common misconception about self-insurance is that it only makes sense for larger companies, but this way of thinking is antiquated and must evolve as the healthcare landscape changes. In a New York Times article, senior fellow at Mathematica Policy Research, Deborah J Chollet, explains “the new health care law created powerful incentives for smaller employers to self-insure” even as self-insurance was increasingly becoming a reality before the adoption of the ACA. In fact, the Employee Benefit Research Institute reported that a majority (59%) of private sector employees who had health coverage were in self-insured health plans in 2011.

Opting out of the commercial insurance market allows employers to take literal control of their healthcare costs. The ACA places new requirements on health insurance companies such as medical-loss ratio requirements which limit how much an insurance company can spend on administrative expenses. The Society for Human Resource Management quotes national health care reform leader Tom Lerche: “Changes to minimum medical-loss ratios for insurance companies are likely to make insured coverage more complicated and more expensive.” Such requirements would not affect a self-insured organization.

Simply put, self-insurance lets employers customize their health plans without having to settle for a more expensive insurance product that may not address the individual organization’s needs. The truth is that every organization is unique and should be able to assess its own employees’ healthcare needs better than a one-size-fits-all insurance product.

2. Implement Employee Health Screenings

If employers are serious about saving money on healthcare, they have to also be serious about the major driver of those costs: employee health. An overwhelming portion of healthcare expenditures can be reduced by shifting emphasis toward preventative care before health conditions turn into much more expensive issues. The first step an organization can take to reduce and avoid the costs of these issues is to implement employee health screenings.

In a recent journal article from the American Heart Association, which examines the role of worksite health screenings, the writing group explains “conducting health screenings in the workplace is a promising strategy for early detection of established risk factors with the hopes of preventing the development of noncommunicable diseases.” Screenings are an important, necessary step for employers to partner with employees to drive down costs and become better healthcare consumers.

What should I do with this information?

Your employee health screening vendor will send an aggregate report of the health trends and overall risk of the population. This is very valuable information. Once you have established a baseline, you can focus on the problem areas within the organization. To maximize ROI, employee health screenings should be implemented in conjunction with employee wellness programs, which by no coincidence is #3 on our list of ways employers can reduce their healthcare costs.

3. Launch Employee Health and Wellness Programs

It has become clear that employers are recognizing that they must change their healthcare strategy and take a proactive role in managing the health of their employees as evidenced by a study from the National Business Group on Health, which finds that “increasing employees’ physical activity & managing their weight are large employers’ top health priorities for 2015.” An organization must hold itself and its employees accountable for health, and while screenings play an important role in identification of health risk factors, wellness programs are the catalyst for promoting and ultimately reducing these risk factors.

There are many different strategies organizations can use to implement programs. For example, JetBlue Airways includes coaching along with its biometric testing and offers financial incentives to its employees for participation, completion, and health improvements in the program. Another organization, Lafarge, encourages participation in wellness programs by limiting plan options to those employees who do not participate. Additionally, in a recent article, Employee Benefit News recently offered 10 tips to help implement a successful wellness program, which focuses on the entire implementation process from planning to evaluate success of the program.

While implementing these programs does require a financial investment, the American Heart Association found that research suggests the investment is justified by the costs that are avoided through participation in health screenings and wellness programs. The study found that the average employer saw $358 of healthcare cost savings per employee at an average of $144 of investment per employee. The final summary from the AHA research states “whether through prevention or risk reduction, current available studies indicate that employers can achieve a positive ROI when employee health screening is offered in concert with a well-designed comprehensive health and wellness program.”

Conclusion

The three methods outlined above give organizations the power to manage their healthcare costs without having to resort to drastic measures such as cutting their workforce or reducing workforce hours. They also have the added bonus of having a genuine impact on employee health and will serve as tools for organizations to attract future talent, increase employee productivity, and increase employee satisfaction.

To learn how on-site clinics can help maximize the above strategies, visit www.careatc.com or download our free guide below.