Posted by Worksite Wellness | Posted in worksite wellness programs | Posted on 28-07-2009
Over the past decade health insurance costs have risen steadily. This is taking a toll on the bottom-line of businesses, cutting into earnings, 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 earnings at the average Fortune 500 company. Corporations, through private health insurance businesses, are the leading provider of healthcare services in the U.S..
In 2004, 59.8 percent of Americans were covered by a company-based health insurance program, accounting for 88 percent of all private health insurance.
Yet the growing costs of Medical Care, ever-increasing prescription prices and a steady rise in chronic illnesses have brought the corporate world to a breaking point.
For many businesses the growing burden has become too difficult to bear. Over the past five years health insurance premiums have grown an average of 11.6 percent each year, more than four times the average rate of inflation and employee earnings over that time. Not surprisingly, this exponential growth in costs has caused the number of businesses offering Medical Care services during that time to drop from 69 percent to 60 percent.
In addition, in 2005, health insurance premiums jumped 9.2 percent, 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 innovative ways to stem the increasing costs of Medical Care coverage.
Seemingly, the easiest strategies to accomplish this goal would be to cut benefits coverage or pass on arising burden to workers and retirees. More than 80 percent of businesses have chosen one or both of these cost saving measures in the past few years and almost half of all sizable businesses are likely to increase the amount workers pay in 2007.
Nevertheless, these approaches do nothing to mitigate the primary causes of increasing costs, one of which is a population that requires increased healthcare. To make a lasting and substantial effect on costs and central health, businesses need to look beyond a old-school reactive-based approach.