Engineering Inc. - January/February 2009 - (Page 18) E mployers need to know that health care costs are not somebody else’s problem. Karen Wood HmB professIonaL enGIneers No Permanent Cure in Sight When asked to name the most serious health care challenge firms face, threequarters of the companies responding to a 2007 survey by the National Federation of Independent Business (NFIB) trade association cited the need to reduce health care costs and address increases in the cost of care. Seventy percent said they would like to get out of the “employee health insurance business,” but felt that wasn’t possible because of prevailing financing and care delivery methods, NFIB said. Concerns such as these are understandable given how quickly costs are rising. The federal government’s Centers for Medicare and Medicaid Services (CMS) estimates that health care spending in this country topped out at more than $2.2 trillion in 2007, or about $7,500 for each citizen. By contrast, spending levels were approximately $75 billion in 1970, or only about $356 per person. These trends probably won’t ease any time soon. CMS expects spending to almost double by 2016, when each individual will account for about $12,782 in bills. The sobering fact is that employers are bearing the brunt of these increases. In 2007 alone, insurance premiums paid by employers jumped more than 6.1 percent as coverage for individuals hit $4,400 per policy and family coverage averaged $12,100, according to a survey by the Henry J. Kaiser Foundation. Pat Feyen, president of the ACEC Life/ Health Trust, says engineering firms can expect health insurance cost increases of 13 percent in 2009–2010. 18 ENGINEERING INC. JaNuaRy / FEbRuaRy 2009 Health care analysts attribute the price hikes to several factors. “The advances of technology mean there are better drugs now than 10 years ago and hospitals can do more life-saving procedures. All that costs money,” says Bradley Herring, assistant professor at Johns Hopkins University’s Bloomberg School of Public Health. “There’s a pretty broad consensus that these new technologies are bringing us benefits that are higher than their additional costs, but that’s not to say that there aren’t some examples of certain technologies that are ineffective on average or perhaps just being overutilized by people who don’t really benefit from them.” O ur business is providing infrastructure for the public, but more and more we have to get into the health care business. Feyen says people’s lifestyle choices also impact prices. “Factors that affect health are principally behavioral,” he says. “Fifty to 70 percent of all diseases are associated with modifiable health risks and are therefore preventable. It follows that these decisions then account for up to 70 percent of all health care spending.” Some say fundamental characteristics of the health care system also help push costs higher. “The economics of health care are unique in that the person consuming the service is not the person who’s paying for it,” says Paul Guppy, vice president for research at the Washington Policy Center, a Seattle-based public-policy think tank. He compares the model to dining on a company expense account: “The menu looks a lot different if your boss is paying than if you’re picking up the tab yourself.” Containing Costs mIcHaeL mcmeeKIn Lamp, rynearson & assocIaTes While health care costs are expected to rise even steeper over the next decade, many businesses, including engineering firms, are finding ways to ease the pain. HMB keeps copayments as low as possible by encouraging employees to schedule physicals and see doctors after early signs of illness. Such personal diligence keeps people healthier and out of the hospital, which reduces premiums. The company also sets a $250 deductible on prescriptions before employees receive discounts—an effort to educate them about the difference between namebrand drugs and generic alternatives. (Continued on page 19) Tom Le Goff/GeTTy ImaGes
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