Health and Wellness Leads : America’s Medical Care Crisis

During the past several years healthcare insurance premiums have climbed at a steady pace. This is taking a toll on the bottom-line of businesses, cutting into profits, limiting growth and forcing a reevaluation of a once sacred employee benefit system. According to a projection by McKinsey & Co., at the present rate, by 2008 health benefits will eclipse profits at the average Fortune 500 organization.

Businesses, through private healthcare insurance employers, are the leading provider of healthcare services in the U.S.. In 2004, 59.8 percent of Americans were covered by a corporation-based healthcare insurance program, accounting for 88 percent of all private healthcare insurance. Yet the growing costs of Healthcare, ever-rising drug prices and a steady rise in chronic diseases have brought the corporate society to a breaking point.

For many employers the growing burden has become too difficult to bear. Over the past five years health care insurance premiums have grown an average of 11.6% annually, more than four times the average rate of inflation and employee earnings over that time.3 Not surprisingly, this exponential growth in premiums has caused the number of employers offering Medical Care services during that time to drop from 69% to 60%.4 In addition, in 2005,  health care insurance premiums jumped 9.2%, more than three times the rate of inflation – and that was the lowest increase in the past five years.

In this environment employers need to discover progressive ways to mitigate the rising costs of Health Care coverage. Seemingly, the easiest strategies to accomplish this goal would be to lower benefits coverage or pass on agrowing burden to staff members and retirees. Greater than 80% of employers have chosen one or both of these cost saving measures in the past several years and almost half of all sizable employers are likely to increase the amount staff members pay in 2007.5

Still, these methods do nothing to address the primary causes of increasing premiums, one of which is a population that requires increased healthcare. To make a long-term and substantial effect on premiums and central health, employers need to look beyond a old-school reactive-based approach.