You probably can’t help but notice lately all the reports about the Supreme Court hearings on the Affordable Care Act (healthcare reform). This is a heated topic in the U.S. because the American health care system is almost unique in the extent to which it funnels health spending through employers. While most of the big developed nations use some type of universal single-payer system that socializes health costs across the entire economy, about 60% of U.S. health care spending goes through employers via employer-sponsored medical insurance. So while U.S. employers are heavily impacted by health care expenses, many of those companies’ competitors in the global economy don’t bear those costs.

While I am not commenting either for or against the Affordable Care Act, I wanted to share with you an interesting report about how employers out there feel about it.

The survey, from GfK Custom Research of North America, found that 56% of the 502 privately held companies questioned said they were likely to continue offering their employees health insurance even if the insurance mandate portion of healthcare reform is enacted as planned in 2014. Just 12% said they would be “very” or “somewhat likely” to drop coverage, while about a third said they didn’t know what they’d do.

This is important, because by providing your employees with health insurance, you are privy to much more data about their health (on a macro level, of course, not on an individual level). This provides important information that can guide your investment in employee wellness. After all, if 35% of your employees have diabetes and/or are overweight, you know where you’re going to focus your spending, right?

Also, when you provide the insurance, you also have more control over the quality of that insurance and the care provided. That’s because you can require that health plans and their providers meet certain evidence-based parameters shown to improve health-related outcomes. This, in turn, could keep your costs down by preventing acute exacerbations of chronic conditions like diabetes, asthma, and heart disease that could otherwise be managed.

All is not completely rosy with the employer/healthcare reform dynamic, however. The GfK survey also found that many employers fear that the new law won’t slow cost increases, or might make costs worse. How it will impact U.S. employers will depend partly on the Supreme Court’s Obamacare decision in June. I believe the results could be dramatic for America’s health care system.

Employers’ ability to control costs will depend on two giant decisions. First is the Supreme Court’s ruling on the constitutionality of the individual mandate. If the justices give it a thumbs-down, employers are in a quandary. They like a mandate because it could lower their insurance costs by forcing more people into the risk pool. And in a world where everyone is legally required to maintain insurance, employers may feel less pressure to offer it, and their costs would likely decrease as they encourage more individuals to purchase their own health insurance through the new insurance exchanges. If the mandate is voted down, employers may choose to continue doing what they’ve already been doing—increasing copayments, deductibles, and premiums.

If the mandate is upheld, then everything depends on the second big decision: the voters’ choice in November. A Republican sweep would probably mean Obamacare’s repeal, while a more muddled election result probably wouldn’t.

One part of the law that can help large employers is the medical loss ratio component. This part of the law, which just went into effect, requires that at least 85% of every premium dollar be spent on actual medical or preventive costs, not marketing or administrative costs. Hopefully that will provide some savings. The good news is that if health plans don’t meet the ratios, they are supposed to refund some of the overrun to you, the customer.

So have you figured out your position on healthcare reform yet? Assuming the full force of the Affordable Care Act is implemented, how do you see it affecting your business?

Bob Fabbio
President & CEO
WhiteGlove Health, Inc.

You know what’s behind stratospherically increasing health costs in this country? Not just more expensive equipment, drugs and procedures, but a population—even a working-age population—with one or more chronic health conditions. I’m talking about diabetes, hypertension, cardiovascular disease, arthritis, congestive heart failure, depression, asthma, and more. Manage these medical conditions with lifestyle changes and, where necessary, medication, and we can save billions. But let them get out of control and we’re spending billions on emergency department care, hospitalizations, surgeries, and more intensive acute medical care.

One place where the focus on chronic disease management is particularly important is the workplace. Yet I was disappointed to read a recent report from Towers Watson Consultants on employee wellness, which found that just 59% of the 3,099 employees they surveyed said that managing their health is a top priority, down from 69% in 2008. The survey also found fewer employees participating in lifestyle management programs, with just 59% saying they were taking actions to significantly improve their health, compared to 65% in 2008.

But, and here’s the rub, just a third of employees said their employer offered programs designed to help them live a healthier lifestyle. We know the percentage is far higher. We also know, as you may have read in one of my earlier blogs, large corporations also surveyed by Towers Watson said they were making significant investments in their employees’ health and wellness and reporting good returns on that investment. In fact, nearly 90% of US companies said that health and productivity is a core component of their organizational health strategy. The report also found that spending on health management programs in the US has grown 50% in the past two years.

So what does it take to get employees more interested in their health? Well, increased deductibles and copayments is one option. After all, if it costs a $150 copayment to be seen in the ER for an asthma attack versus a $10 copayment to see your doctor for education and management, which do you think cash-strapped employees will choose?

Your job as an employer is to help them understand the differences and the fact that they have control over the outcome. Staying with the asthma example, show them the potential costs savings over time, how to use maintenance medication, track their lung function, and implement their action plan at the start of any breathing difficulty—not when they are having so much trouble breathing they need to be seen in the ER.

Conversely, offering reduced premiums to employees who meet certain health-related parameters—losing weight, controlling their blood sugar, quitting smoking—provides a “carrot” approach also shown to be quite successful.

Also ask yourself how well you’re marketing your wellness programs. The reality is, these programs should be marketed just as aggressively to your employees as you market services and products to your customers. It really takes employers to be very intentional about changing the behavior of their employees and dependents. If they are not, very little will change with respect to their healthcare spend.

So, how are you marketing your wellness programs, and what kind of participation are you getting? Are you getting the kind of results you would like?

Bob Fabbio
President and CEO
WhiteGlove Health, Inc.

If you think your company spends a lot on healthcare, take a look at what we spend as a country (Figure 1). Notice anything disturbing? How about the fact that the US spends 50% more per capita than the next highest-spending country, Norway. In addition, we spent more on healthcare as a percentage of our gross domestic product (GDP) than any other country (Figure 2), and our health care expenditures have been growing faster than other Western countries (Figure 3).

So, given that we spend so much more, we must get more, right? Um, no.

A 2011 survey from the Commonwealth Fund found that 42% of chronically and seriously ill adults did not visit a doctor, fill a prescription or take all their medication, or receive getting recommended care because of high healthcare costs—a significantly higher proportion than in all other countries surveyed, and more than double the rates in Canada, France, the Netherlands, Norway, Sweden, Switzerland, and the UK. In addition, US patients had among the highest rates of self-reported medication, lab, or medical errors, as well as gaps in coordination of care. In addition:

• US life expectancy is at or below the average when compared with other developed countries. When the findings of mortality are adjusted for deaths not related to health care (ie., accidents and suicide), the US is among the worst performers.(2)
• The US has the highest rate of deaths among 19 countries from conditions that could have been prevented or treated successfully (3)
• Among 30 Organization of Economic Cooperation and Development (OECD, which includes industrialized democracies) countries, the United States ranks below average in adult asthma care and childhood vaccination rates. (2)
• The United States has the highest rates of coronary revascularization procedures, more than double the rates of other countries with similar mortality rates from heart disease. This does not equate, however, to lower mortality rates from cardiovascular disease. (2)
• Higher rates of certain surgeries and procedures in the United States put more Americans at risk than patients in other countries even though the share of inappropriate procedures is similar across countries. (2)
• The US has among the highest rates of caesarean sections (about 37 per 100 live births) of any OECD countries. The World Health Organization cautions that rates above 15 percent offer no benefits in terms of population health. (2)
• Patients in the US health system were less satisfied than those in other countries in terms of the quality of communication with their doctors, and how much their doctors engaged them in health care decision making. They are also less likely to say they could get medical attention when needed. (2)

The news isn’t all grim. We have some of the highest survival rates for cancer, likely because we also have some of the highest cancer screening rates, enabling cancers to be caught earlier. Of course, this also means we have some of the highest rates of cancer overall because more screening means more early cancers are caught that might never have gotten to the point of becoming a health problem.

I don’t know about you, but I have to think that when it comes to what we spend on healthcare in this country, we’re simply not getting our money’s worth. What do you think?

Bob Fabbio
CEO
WhiteGlove Health, Inc.

Figure 1: Total Health Expenditure per Capita, US and Selected Countries, 2008

Source: Kaiser Family Foundation. Health Care Spending in the United States and Selected OECD Countries. April 2011Available at: http://www.kff.org/insurance/snapshot/OECD042111.cfm

Figure 2: Total Health Expenditure as a Share of GDP, U.S. and Selected Countries, 2008

Source: Kaiser Family Foundation. Health Care Spending in the United States and Selected OECD Countries. April 2011Available at: http://www.kff.org/insurance/snapshot/OECD042111.cfm

Figure 3: Growth in Total Health Expenditure Per Capita, U.S. and Selected Countries, 1970-2008

Source: Kaiser Family Foundation. Health Care Spending in the United States and Selected OECD Countries. April 2011Available at: http://www.kff.org/insurance/snapshot/OECD042111.cfm

Sources:
(1) 2011 Commonwealth Fund International Health Policy Survey. Available at: http://www.commonwealthfund.org/Surveys/2011/Nov/2011-International-Survey.aspx. Accessed March 23, 2012.
(2) Docteur E, Berenson RA, Urban Institute. How Does the Quality of U.S. Health Care Compare Internationally? Quick Strike Series, August 2009. Available at: http://www.rwjf.org/files/research/qualityquickstrikeaug2009.pdf. Accessed March 23, 2012.
(3) Nolte, McKee. Measuring the Health of Nations: Updating an Earlier Analysis. Health Affairs. 2008;27(1):58-71.