Increased Patient Cost-Sharing,Weak US Economy,and Poor Health Habits: Implications for Employers and Insurers

Many healthcare stakeholders, including insurers and employers, agree that growth in healthcare costs is inevitable. But the current trend toward further cost-shifting to employees and other health plan members is unsustainable. In 2008, the Zitter Group conducted a large national study on the relationship between insurers and employers, to understand how these 2 healthcare stakeholders interact in the creation of health benefit design. The survey results were previously summarized and discussed in the February/March 2009 issue of this journal. The present article aims to assess the implications of those results in the context of the growing tendency to increase patient cost-sharing, a weak US economy, and poor health habits. Increasing cost-sharing is a blunt instrument: although it may reduce utilization of frivolous services, it may also result in individuals forgoing medically necessary care. Increases in deductibles will lead to an overall decrease in optimal care-seeking behavior as families juggle healthcare costs with a weak economy and stagnating wages.In the spring of 2008, the Zitter Group conducted a large national study of the insurer—employer relationship to understand how these 2 stakeholders interact in the creation of healthcare benefit design. The 2-arm study consisted of concurrent web-based quantitative surveys with commercial managed care executives, large employers, and major employer benefits consultants.1 It was designed to provide a richly detailed snapshot of trends in employer-sponsored healthcare coverage. Despite having varying ideas on specific healthcare benefit design strategies, employers and insurers assign similar weights to the importance of cost, quality, and access when making benefit design decisions.1,2 For both groups, the importance assigned to cost is 1.5 times higher in value than healthcare access or healthcare quality.1 Throughout the survey, both groups cited access and quality concerns, but in the current environment of steadily rising cost growth, the importance assigned to cost takes on an even greater significance. The survey results were summarized in the February/March issue of this journal.1 The present article is a follow-up to that article, and its goal is to place those survey results in the context of increased patient cost-sharing, a weak US economy, and the poor health habits that are characteristic of many segments of the American population.According to the data from the Benefit Design Index, in the absence of clear alternatives to traditional benefit designs, cost-shifting to patients through increases in copayments, deductibles, and premiums remains the primary cost-containment strategy used by employers and insurers. More than half of employers and three quarters of insurers have increased their premiums and deductibles between June 2007 and June 2008.1 Furthermore, two thirds of insurers and half of employers do not believe that the recent slowing growth rate of premiums is sustainable and, as a result, expect to increase all forms of patient cost-sharing.1 However, employers remain aware of the dangers of passing too many costs to employees; high out-of-pocket costs can translate into reduced adherence to medical treatments and, ultimately, deteriorating employee health and productivity.1,2In 2003, 30% of employees reported having a chronic health condition.3 That rate was likely to be even higher in 2008.4 The American Hospital Association reported that approximately 69 million workers took 1 or more sick days in 2003, totaling 407 million lost work days.3 In addition, 50% of employees reported being distracted at work by health concerns, reducing their productivity.3 Although absenteeism and lost productivity cost estimates vary widely, it is likely that they cost US businesses several million dollars a year.5,6 Combine the burdens of high employer healthcare costs, deteriorating employee health, and a weak US economy, and you have the ingredients for a “perfect storm”—one that is likely to lead to an insurance “death spiral,” from which we may not be able to recover.