Employee Wellness Newsletter : America’s Health Care Crisis

Over the past decade health care insurance costs have risen at a steady pace. This is taking a toll on the bottom-line of employers, 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.

Corporations, through private health insurance businesses, are the leading provider of medical services in the U.S.. In 2004, 59.8 percent of Americans were covered by a employer-based health insurance program, accounting for 88 percent of all private health insurance. Yet the escalating costs of Medical Care, 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 medical insurance premiums have increased an average of 11.6% each year, 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 Health Care services during that time to drop from 69% to 60%.4 In addition, in 2005,  medical 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 businesses need to discover progressive ways to stem the rising costs of Medical Care coverage. Seemingly, the easiest strategies to accomplish this goal would be to lower benefits coverage or pass on arising burden to employees and retirees. More than 80 percent of businesses have chosen one or both of these options in the past few years and almost half of all sizable businesses are likely to increase the amount employees pay in 2007.5

Nevertheless, these options do nothing to address the fundamental causes of rising costs, one of which is a population that requires increased healthcare. To make a lasting and substantial effect on costs and central health, employers need to look beyond a traditional reactive-based approach.