Lower Health Care Costs May Not Be Out of Reach
It is no surprise that health care costs have been growing at an astounding rate each year. Lack of transparency and skewed pricing is making it very difficult for employees and employers alike to save on necessary health-related costs. Fortunately, not all hope is lost. With the right strategies, employers can work with their benefits consultant to combat these price spikes and lower health care costs for their company and their valued employees.
The Rise of Healthcare Costs
In 2017 the cost of American health care was 17.9 percent of our Gross Domestic Product (GDP). To put that in perspective, as recently as the 1980s, health care costs were only 7.5 percent of the GDP. In the 1990s, those costs rose slightly to 10 percent of GDP and in 2000, health care costs amounted to 13.3% of the GDP. While the average annual plan deductible for an individual has gone up and is currently $1,500, consumer health care costs are increasing across the board. Pharmacy costs, in particular, have grown to more than 20% of claims.
This growth in expenses is not new. The trend is clear – health care costs have increased at a much higher rate than anything else in the economy.
Lack of Transparency
What could be the cause of this immense growth?
Simply put, there is a lack of transparency when it comes to health care costs. Back in 1982, the average person visited the doctor 1.8 times per year, but by 2015, that number rose to 5.5. More and more, hospitals are encouraged to refer patients to other specialty providers within their health care organizations. This will bring more doctor visits, and in turn, more revenue to the hospital at the cost of the patient.
Providers sometimes try to justify high health care costs, claiming that once a patient meets their deductible, everything will be covered for them. But this justification is putting patients at an extreme disadvantage.
Rising prescription costs, maximized specialty drug pricing, and ignoring out of pocket costs for employee and employers are all contributing to the problem.
Despite the years of growth health care costs have experienced, there is still hope for lowering health care costs. There’s a positive shift taking place in the health care industry these days. Entrepreneurs, thought leaders and other experts are learning to deliver health care directly to employees through reference-based pricing.
Reference-based pricing enables the cost of services to be negotiated up front. Before having a major procedure performed consumers often request an Estimate of Benefits from their insurance company, to see ahead of time what dollar amount will be covered and what they will be responsible for. When an employer secures reference-based pricing, employees can negotiate the cost of the service with the insurance company at the time of the estimate.
The goal is to reduce costs to both the employees and the companies that employ them – while improving care outcomes. Lowering health care costs may not be out of reach and employers are seeking solutions.
Employers, entrepreneurs, law-makers and other thought leaders are seeking alternatives, as a result solutions like reference-based pricing have come to light. Check back with benefEx for helpful information about reference-based pricing and other topics affecting consumer healthcare.