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What Employees Need to Know About the Real Cost of Healthcare

Everyone in America knows that the healthcare landscape is rapidly changing. Although the
Obama administration is working to make sweeping changes in how healthcare is paid for, no one
yet knows if and/ or when the new plans will affect individuals and businesses. In the meantime,
insurance premiums are growing by leaps and bounds, and employers and healthcare
organizations everywhere are seeking innovative approaches to reduce, or at least stabilize, these
costs. Most experts agree that any savings generated from managed care options has long since
evaporated. These experts feel the greatest chance for improvement lies in consumer directed
healthcare. The idea behind the movement towards consumer directed care is that patients will
better understand expenditures and will share in the costs, making them more discerning
consumers of health care.

To understand why the cost of healthcare is skyrocketing, there are several factors to consider.
The list includes:

-New Medications being marketed aggressively

-New Medical Technologies

-An Aging Population

-Overuse of Medical Services

-Cost Insulation that isolates patients from the real cost of healthcare services, as well as the
true cost of pharmaceuticals

But what can be done about any of these factors? Obviously, insurance carriers, employers and
consumers have little control over medical advancements or the increasing age of the U.S.
population. Additionally, to attract and retain valuable employees, employers need to continue
offering comprehensive medical plans. Although employers may not be able to directly affect
costs, they can play an active role in creating an informed healthcare consumer.

In our current healthcare system, consumers are sheltered from the true value of their healthcare.
Many employees believe that the average prescription drug and doctor visit costs little more than
their $15 or $20 co- pay. But health insurers and employers are keenly aware of what these
services cost. Taken together, the lack of incentives for employees to use healthcare prudently,
plus the ever- rising healthcare costs, lead us to the difficult spot we are in today.

Over recent years, defined contribution healthcare plans have garnered much attention to the need
for consumer education. With a "consumer- directed" model of health coverage, consumers bear
a significant amount of responsibility for financial decision- making. And although employees still
have coverage for disastrous events, they may only have a certain set dollar amount to use toward
day- to- day expenses, generally excluding preventative care. Therefore, when a consumer directed
approach is being considered, communication is vital, and a strategy for educating
employees is a must.

How can employers help? The answer depends on the size and the resources of the company.

Large companies, which are often self- funded, have a greater stake in the outcome of an
educational effort. These companies might have the resources to hire third party providers to
develop and implement programs for employee education. However, even many larger
businesses may not have the extra time or resources to commit to a full- scale education effort.
Despite this fact, most employers have free access to education resources directly through their
health insurer. In particular, pharmacy education is often integrated within a specific medical
plan. For example, some insurance companies give their members cost comparison information
of brand name versus generic drugs. Insurers have also created tiered pharmacy plans, which
use lower co- pays to encourage members to use generic drugs whenever possible. Since an
increasing proportion of health dollars is spent on developing and marketing pharmaceuticals, the
situation would only worsen if not for these early education efforts.

Many insurance carriers in the U.S. now offer searchable online databases for their members
where they can research the approximate cost of certain procedures. Employees considering a
"routine" MRI are able to view the cost of this procedure and their out- of- pocket cost potential.
While this information may not affect everyone's decision, some will consider foregoing the
procedure if they feel it is not really necessary.

Another idea is for insurance carrier representatives to host health seminars and workshops for
businesses and employees. Topics could range from healthy diets to disease management, as
well as the value of preventative care. Employers should show commitment to these programs by
making such meetings mandatory.

Repetition is the key to making health education work. Employees should have easy access to
healthcare alternatives. Communication at annual enrollment time is not enough. The message
needs to be communicated more often, using multi- media with clear and clever delivery.
Undoubtedly, employers will benefit from lower premiums in the future by educating employees
today. When employees utilize healthcare resources more efficiently, everyone wins. Over the
long haul, cost- effective healthcare choices can produce savings that not only flow directly back to
the employer, but to the consumer as well. And, in these tough economic times, who can argue
with that?