As Congress and President Trump recently found out, health care policy is difficult to understand, and next-to-impossible to change.
This recent article from The New York Times delved into some of the reasons why health care policy is so complicated.
The author of the article detailed several different factors that have a large, complicating, effect on health care. These factors include:
- Lack of consumer knowledge
- Spending volatility
- Adverse selection
For business leaders, these reasons in addition with the tangle of information and regulations that is health care can prove a real challenge. Yet, there remains some hope.
This hope comes in the form of employee benefits. Your company’s employee benefits can make a world of difference for your employees and their understanding and utilization of health care coverage.
Here are some of the top methods your company can use to maximize your employees’ use of their health care policy.
The most obvious method for uncomplicating health care for your employees is providing them with health insurance. Health insurance is a standard benefit and one that is valuable to a majority of employees.
Externalities can dramatically affect health care, as a whole, according to the article. These externalities, as defined by Investopedia, are a consequence of an economic activity experienced by unrelated third parties.
Still, individuals who have health insurance can help negate the number of externalities affecting others’ health care.
For example, if all healthy people decided one day that they all wanted to get rid of their health insurance, the marketplace would instantly change. Only unhealthy individuals would remain, and overall costs of insurance would skyrocket.
We will discuss this example in more detail later. But by offering as many of your employees health coverage as possible, it helps to reduce some of these externalities.
Inform and Educate
Here at The Olson Group, our mission is to inform, educate, and empower employees to make the best benefits decisions for themselves and their families.
There is a reason we use the words inform and educate. Knowledge, as they say, is power. And yet, too many times health care consumers don’t have all the information to make the best decisions for themselves.
For employees to augment the utility they get from any benefit, let alone health insurance, they need to have the right information. An annual meeting with your broker is not enough to truly educate your employees.
Your company needs to invest in a complete employee education. Educate and inform your staff through instruments such as telehealth, price comparison tools, and service comparison information.
All of these tools let your employees be better health care consumers and get the most out of their health insurance.
Attention to Prevention
Preventive care has had an increased emphasis under the ACA. Insurance plans have to cover recommended preventive services without any patient cost-sharing.
According to a 2015 article from The Kauffman Foundation, research has shown that evidence-based preventive services can save lives and improve health.
This research has demonstrated that through identifying illnesses earlier, managing them more effectively, and treating them earlier, preventive care can really help your employees.
One of the factors affecting health care is spending volatility. Preventive care is a good way to avoid some of the unpredictability associated with health care spending.
Money in the Bank
Overconsumption is another serious problem for many health care consumers. Health insurance, like almost anything else, can be used irresponsibly.
As the article says, when insurance is picking up the tab, people have less incentive to be cost-conscious.
The rise of HSAs and HDHPs has been a direct response to this lack of spending responsibility. Utilizing a high-deductible insurance plan gives employees more “skin” in the game.
The high deductibles of these plans make employees more cost-conscious as they now have to spend a large amount of money, before reaching any cost-sharing thresholds.
HSAs also help your staff become more cost-conscious because they give you a specific, independent, account for your health care costs.
This separate account, not only allows you to save money but can make you more conscious of your spending.
It’s easier to track exactly how much you’re spending on health care because the account is completely separated from any other account, and can only be used for qualified health care expenditures.
Additionally, you can only use money in HSAs for qualified health care expenditures. These rules limit the possibility of frivolous spending on something other than health care.
Ending Where We Began
Adverse selection is a final complication of health care. Adverse selection occurs when customers differ in relevant ways and those differences are known to them but not to insurers.
These differences can result in a high-percentage mix of people buying insurance who use more than the average amount and become especially expensive.
One way a company can reduce adverse selection is to offer health insurance to more employees. Enrolling more of your employees in health insurance can help fight against adverse selection.
By and large, the more employees, each company can enroll, the more policies there are to spread risk around.
Ideally, spreading risk also works to spread the cost. Individuals who would normally be unable to afford insurance, due to a pre-existing condition, are now able to purchase affordable coverage because their risk is mitigated.
Health care policy is like one of the most underrated Disney-animations of all time; Tangled. There’s no way around it, and, as our government found out, it seems unlikely to change in a major way.
Still, the five actions above will help your business reduce the complications of health care policy for all of its staff. These five steps act as a fancy conditioner; they detangle.